AGREEMENT AND PLAN OF MERGER
by and among
SOFTKEY INTERNATIONAL INC.,
CUBSCO I INC.,
CUBSCO II INC.,
TRIBUNE COMPANY,
XXXXXXX'X NEWMEDIA, INC.
and
XXXXXXX'X LEARNING COMPANY
dated November 30, 1995
TABLE OF CONTENTS
ARTICLE I
THE CNI MERGER
1.1. General . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Conversion of CUBSCO I Stock . . . . . . . . . . . . . 1
1.3. Conversion of CNI Common Stock . . . . . . . . . . . . 2
1.4. CNI Surviving Corporation . . . . . . . . . . . . . . . 2
1.5. Effect of the CNI Merger . . . . . . . . . . . . . . . 2
1.6. Organizational Documents . . . . . . . . . . . . . . . 2
1.7. Directors and Officers . . . . . . . . . . . . . . . . 3
1.8. CNI Effective Time . . . . . . . . . . . . . . . . . . 3
1.9. Tax Consequences . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE CLC MERGER
2.1. General . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Conversion of CUBSCO II Stock . . . . . . . . . . . . . 4
2.3. Conversion of CLC Common Stock . . . . . . . . . . . . 4
2.4. CLC Surviving Corporation . . . . . . . . . . . . . . . 4
2.5. Effect of the CLC Merger . . . . . . . . . . . . . . . 5
2.6. Organizational Documents . . . . . . . . . . . . . . . 5
2.7. Directors and Officers . . . . . . . . . . . . . . . . 5
2.8. CLC Effective Time . . . . . . . . . . . . . . . . . . 5
2.9. Tax Consequences . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
MATTERS RELATED TO THE MERGERS AND THE SOFTKEY SHARES
3.1. Registration; Legends; etc. . . . . . . . . . . . . . . 6
3.2. Standstill . . . . . . . . . . . . . . . . . . . . . . 6
3.3. Closing; Effectiveness of Mergers . . . . . . . . . . . 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1. Corporate Organization . . . . . . . . . . . . . . . . 7
4.2. Authorization . . . . . . . . . . . . . . . . . . . . 8
4.3. Capitalization . . . . . . . . . . . . . . . . . . . . 8
4.4. Ownership of Shares . . . . . . . . . . . . . . . . . 9
4.5. Consents and Approvals; Non-Contravention . . . . . . 9
4.6. Financial Statements . . . . . . . . . . . . . . . . . 10
4.7. Interim Change . . . . . . . . . . . . . . . . . . . . 10
4.8. No Undisclosed Liabilities . . . . . . . . . . . . . . 13
4.9. Litigation . . . . . . . . . . . . . . . . . . . . . . 13
4.10. No Violation . . . . . . . . . . . . . . . . . . . . . 13
4.11. NewMedia Business; Title to Assets . . . . . . . . . . 14
4.12. Intellectual Property . . . . . . . . . . . . . . . . 15
4.13. Contracts and Commitments . . . . . . . . . . . . . . 18
4.14. Customers and Suppliers . . . . . . . . . . . . . . . 22
4.15. Products . . . . . . . . . . . . . . . . . . . . . . . 22
4.16. Returns . . . . . . . . . . . . . . . . . . . . . . . 23
4.17. Competition . . . . . . . . . . . . . . . . . . . . . 23
4.18. Insurance . . . . . . . . . . . . . . . . . . . . . . 23
4.19. Access to Buyer Information . . . . . . . . . . . . . 24
4.20. Seller's Investment Intent . . . . . . . . . . . . . . 24
4.21. Securities Legend; Stop Transfer Instructions . . . . 24
4.22. Environmental Matters . . . . . . . . . . . . . . . . 25
4.23. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 26
4.24. Benefit Plans . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
5.1. Corporate Organization . . . . . . . . . . . . . . . . 31
5.2. Authorization . . . . . . . . . . . . . . . . . . . . . 31
5.3. SEC Filings. . . . . . . . . . . . . . . . . . . . . . 31
5.4. Authorization and Issuance of SoftKey Shares . . . . . 32
5.5. Consents and Approvals; Non-Contravention . . . . . . . 32
5.6. Litigation . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Consents and Other Approvals . . . . . . . . . . . . . 33
6.2. Related Agreements and Instruments . . . . . . . . . . 33
6.3. Conduct of the NewMedia Business . . . . . . . . . . . 34
6.4. Audited Financial Statements . . . . . . . . . . . . . 36
6.5. Conveyance Taxes . . . . . . . . . . . . . . . . . . . 36
6.6. Severance and Termination Costs. . . . . . . . . . . . 36
6.7. Noncompetition . . . . . . . . . . . . . . . . . . . . 37
6.8. CNI Recapitalization . . . . . . . . . . . . . . . . . 39
6.9. Further Assurances . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
7.1. No Injunction or Restraints . . . . . . . . . . . . . . 39
7.2. Regulatory Approvals . . . . . . . . . . . . . . . . . 40
7.3. Standstill Agreement . . . . . . . . . . . . . . . . . 40
7.4. Tax Sharing Agreement . . . . . . . . . . . . . . . . . 40
7.5. Section 1445 Certificate . . . . . . . . . . . . . . . 40
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
8.1. No Injunction or Restraints . . . . . . . . . . . . . . 40
8.2. Regulatory Approvals . . . . . . . . . . . . . . . . . 40
8.3. Registration Rights Agreement . . . . . . . . . . . . . 40
8.4. Tax Sharing Agreement . . . . . . . . . . . . . . . . . 40
8.5. Section 6.2(c) Election . . . . . . . . . . . . . . . . 40
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1. Termination of Agreement . . . . . . . . . . . . . . . 41
9.2. Effect of Termination . . . . . . . . . . . . . . . . . 41
ARTICLE X
GENERAL PROVISIONS
10.1. Amendment and Waiver . . . . . . . . . . . . . . . . . 41
10.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . 42
10.3. Broker's and Finder's Fees . . . . . . . . . . . . . . 42
10.4. Notices . . . . . . . . . . . . . . . . . . . . . . . 42
10.5. Entire Agreement; Binding Effect . . . . . . . . . . . 43
10.6. Survival . . . . . . . . . . . . . . . . . . . . . . . 43
10.7. Remedies . . . . . . . . . . . . . . . . . . . . . . . 44
10.8. Applicable Law . . . . . . . . . . . . . . . . . . . . 44
10.9. Parties in Interest . . . . . . . . . . . . . . . . . 44
10.10. Counterparts . . . . . . . . . . . . . . . . . . . . . 44
10.11. Headings; Pronouns and Conjunctions . . . . . . . . . 44
10.12. Announcements . . . . . . . . . . . . . . . . . . . . 44
Exhibit A -- Form of Merger Agreement - CNI
Exhibit B -- Form of Certificate of Merger - CLC
Exhibit C -- Form of Registration Rights Agreement
Exhibit D -- Form of Standstill Agreement
Exhibit E -- Form of Buyer's Promissory Note
Exhibit F -- Form of Tax Sharing Agreement
AGREEMENT AND PLAN OF MERGER
THIS MERGER AGREEMENT is made and entered into this
30th day of November, 1995, by and among SoftKey International
Inc., a Delaware corporation ("Buyer"), Cubsco I Inc., a
California corporation ("CUBSCO I"), Cubsco II Inc., a Delaware
corporation ("CUBSCO II"), Tribune Company, a Delaware
corporation ("Seller"), Xxxxxxx'x NewMedia, Inc., a California
corporation ("CNI"), and Xxxxxxx'x Learning Company, a Delaware
corporation ("CLC" and, together with CNI, the "Companies").
WHEREAS, Seller is the owner of all of the issued and
outstanding capital stock of CNI and CLC; and
WHEREAS, Buyer desires to acquire CNI and CLC upon the
terms and subject to conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants, agreements
and conditions hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
THE CNI MERGER
1.1. General. This Agreement and the form of Merger
Agreement attached hereto as Exhibit A (the "CNI Merger
Agreement") provide for a merger (the "CNI Merger") of CUBSCO I
with and into CNI, with CNI being the surviving corporation. In
the CNI Merger, it is contemplated that the then outstanding
shares of CNI's common stock ("CNI Common Stock") will be
converted at the CNI Effective Time (as hereinafter defined) into
the right to receive, at or subsequent to the Closing (as
hereinafter defined), an aggregate number of shares, rounded up
to the nearest whole share (the "CNI SoftKey Shares"), of Buyer's
common stock, par value $.01 per share ("SoftKey Common Stock"),
obtained by dividing $104,500,000 by the volume-weighted average
of the closing prices for SoftKey Common Stock as quoted over the
Nasdaq National Market for the 10 full trading days ending on the
second full trading day prior to the CNI Effective Time.
1.2. Conversion of CUBSCO I Stock. Each share of
CUBSCO I's common stock, par value $.01 per share ("CUBSCO I
Stock"), issued and outstanding immediately prior to the CNI
Effective Time shall, by virtue of the CNI Merger and without any
action on the part of the holder thereof, be converted into and
exchangeable for one share of common stock of CNI ("New CNI
Stock") as the CNI Surviving Corporation (as hereinafter
defined). From and after the CNI Effective Time, each
outstanding certificate theretofore representing shares of CUBSCO
I Stock shall be deemed for all purposes to evidence ownership of
and to represent the number of shares of New CNI Stock into which
such CUBSCO I Stock shall have been converted. Promptly after
the CNI Effective Time, the CNI Surviving Corporation shall issue
to Buyer a stock certificate or certificates representing shares
of New CNI Stock in exchange for the certificate or certificates
which formerly represented shares of CUBSCO I Stock (which shall
be cancelled).
1.3. Conversion of CNI Common Stock. Each share of
CNI Common Stock issued and outstanding immediately prior to the
CNI Effective Time, other than shares of CNI Common Stock which
are held by CNI or by Buyer or any subsidiary of Buyer (which
shares will be cancelled at the CNI Effective Time), shall, by
virtue of this Agreement and without any action on the part of
the holder thereof, be converted into the right to receive the
number of shares of SoftKey Common Stock obtained by dividing the
CNI SoftKey Shares by the number of shares of CNI Common Stock
outstanding immediately prior to the CNI Effective Time. In
reliance on the representations and warranties of Seller
contained in Sections 4.19 and 4.20 hereof, Buyer will deliver to
Seller at the Closing a stock certificate or certificates
representing the CNI SoftKey Shares upon surrender of the
certificate(s) representing the shares of CNI Common Stock so
converted.
1.4. CNI Surviving Corporation. In accordance with
the provisions of this Agreement and the California General
Corporation Law ("CGCL"), at the CNI Effective Time, CUBSCO I
shall be merged with and into CNI, and CNI shall be the surviving
corporation (the "CNI Surviving Corporation") and shall continue
its corporate existence under the CGCL. The name of the CNI
Surviving Corporation shall continue to be Xxxxxxx'x NewMedia,
Inc. The separate corporate existence of CUBSCO I shall
terminate at the CNI Effective Time.
1.5. Effect of the CNI Merger. At the CNI Effective
Time, the CNI Merger shall have the effect provided for under the
CGCL.
1.6. Organizational Documents. The Articles of
Incorporation of CNI, as in effect at the CNI Effective Time,
shall be the Articles of Incorporation of the CNI Surviving
Corporation until thereafter amended as provided by law. The By-
Laws of CNI, as in effect immediately prior to the CNI Effective
Time, shall be the By-Laws of the CNI Surviving Corporation,
until amended as provided by law and the express terms of the By-
Laws. At the Closing, Seller or CNI shall deliver or cause to be
delivered to Buyer the stock book, stock ledger, minute book and
corporate seal, if any, of CNI.
1.7. Directors and Officers. The directors and
officers of the CNI Surviving Corporation shall consist of the
directors and officers of CUBSCO I immediately prior to the
Effective Time, each to hold office in accordance with the CGCL,
the Articles of Incorporation of the CNI Surviving Corporation
and the By-Laws of the CNI Surviving Corporation. Seller shall
use reasonable efforts to deliver or cause to be delivered to
Buyer at the Closing the written resignations of all of the
officers and directors of CNI from their positions as officers or
directors, effective as of the CNI Effective Time.
1.8. CNI Effective Time. The CNI Merger shall be
effected by the filing of the CNI Merger Agreement (together with
the officer's certificate of each of CUBSCO I and CNI required
under Section 1103 of the CGCL) with the Secretary of State of
the State of California on the day of the Closing. The term "CNI
Effective Time" shall be the date and time when the CNI Merger
becomes effective, as set forth in the CNI Merger Agreement.
1.9. Tax Consequences. It is intended that the CNI
Merger shall constitute a reorganization within the meaning of
Section 368(a) of the Code Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall constitute a
"plan of reorganization" for the purposes of Section 368 of the
Code.
ARTICLE II
THE CLC MERGER
2.1. General. This Agreement and the Certificate of
Merger attached hereto as Exhibit B (the "CLC Merger
Certificate") provide for a merger (the "CLC Merger" and,
together with the CNI Merger, the "Mergers") of CUBSCO II with
and into CLC, with CLC being the surviving corporation. In the
CLC Merger, it is contemplated that the then outstanding shares
of CLC's common stock, par value $1.00 per share (the "CLC Common
Stock"), will be converted at the CLC Effective Time (as
hereinafter defined) into the right to receive, at or subsequent
to the Closing, an aggregate number of shares, rounded up to the
nearest whole share (the "CLC SoftKey Shares" and, together with
the CNI SoftKey Shares, the "SoftKey Shares"), of SoftKey Common
Stock obtained by dividing $2,000,000 by the volume-weighted
average of the closing prices for SoftKey Common Stock as quoted
over the Nasdaq National Market for the 10 full trading days
ending on the second full trading day prior to the CLC Effective
Time.
2.2. Conversion of CUBSCO II Stock. Each share of
CUBSCO II's common stock, par value $.01 per share ("CUBSCO II
Stock"), issued and outstanding immediately prior to the CLC
Effective Time shall, by virtue of the CLC Merger and without any
action on the part of the holder thereof, be converted into and
exchangeable for one share of common stock, par value $1.00 per
share, of CLC ("New CLC Stock") as the CLC Surviving Corporation
(as hereinafter defined). From and after the CLC Effective Time,
each outstanding certificate theretofore representing shares of
CUBSCO II Stock shall be deemed for all purposes to evidence
ownership of and to represent the number of shares of New CLC
Stock into which such CUBSCO II Stock shall have been converted.
Promptly after the CLC Effective Time, the CLC Surviving
Corporation shall issue to Buyer a stock certificate or
certificates representing shares of New CLC Stock in exchange for
the certificate or certificates which formerly represented shares
of CUBSCO II Stock (which shall be cancelled).
2.3. Conversion of CLC Common Stock. Each share of
CLC Common Stock issued and outstanding immediately prior to the
CLC Effective Time, other than shares of CLC Common Stock which
are held by CLC or by Buyer or any subsidiary of Buyer (which
shares will be cancelled at the CLC Effective Time), shall, by
virtue of this Agreement and without any action on the part of
the holder thereof, be converted into the right to receive the
number of CLC SoftKey Shares obtained by dividing the total
number of CLC SoftKey Shares by the number of shares of CLC
Common Stock outstanding immediately prior to the CLC Effective
Time. In reliance on the representations and warranties of
Seller contained in Sections 4.19 and 4.20 hereof, Buyer will
deliver to Seller at the Closing a stock certificate or
certificates representing the CLC SoftKey Shares upon surrender
of the certificate(s) representing the shares of CLC Common Stock
so converted.
2.4. CLC Surviving Corporation. In accordance with
the provisions of this Agreement and the General Corporation Law
of the State of Delaware (the "DGCL"), at the CLC Effective Time,
CUBSCO II shall be merged with and into CLC, and CLC shall be the
surviving corporation (the "CLC Surviving Corporation") and shall
continue its corporate existence under the DGCL. The name of the
CLC Surviving Corporation shall continue to be Xxxxxxx'x Learning
Company. The separate corporate existence of CUBSCO II shall
terminate at the CLC Effective Time.
2.5. Effect of the CLC Merger. At the CLC Effective
Time, the CLC Merger shall have the effect provided for under the
DGCL.
2.6. Organizational Documents. The Certificate of
Incorporation of CLC, as in effect at the CLC Effective Time,
shall be the Certificate of Incorporation of the CLC Surviving
Corporation until thereafter amended as provided by law. The By-
Laws of CLC, as in effect immediately prior to the CLC Effective
Time, shall be the By-Laws of the CLC Surviving Corporation,
until amended as provided by law and the express terms of the By-
Laws. At the Closing, Seller or CLC shall deliver or cause to be
delivered to Buyer the stock book, stock ledger, minute book and
corporate seal, if any, of CLC.
2.7. Directors and Officers. The directors and
officers of the CLC Surviving Corporation shall consist of the
directors and officers of CUBSCO II immediately prior to the CLC
Effective Time, each to hold office in accordance with the DGCL,
the Certificate of Incorporation of the CLC Surviving Corporation
and the By-Laws of the CLC Surviving Corporation. Seller shall
use reasonable efforts to deliver or cause to be delivered to
Buyer at the Closing the written resignations of all of the
officers and directors of CLC from their positions as officers or
directors, effective as of the CLC Effective Time.
2.8. CLC Effective Time. The CLC Merger shall be
effected by the filing of the CLC Merger Certificate with the
Secretary of State of the State of Delaware on the day of the
Closing. The term "CLC Effective Time" shall be the date and
time when the CLC Merger becomes effective, as set forth in the
CLC Merger Certificate.
2.9. Tax Consequences. It is intended that the CLC
Merger shall constitute a reorganization within the meaning of
Section 368(a) of the Code and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section
368 of the Code.
ARTICLE III
MATTERS RELATED TO THE MERGERS AND THE SOFTKEY SHARES
3.1. Registration; Legends; etc. The SoftKey Shares
shall be registered by Buyer at the times and subject to the
terms and conditions of a Registration Rights Agreement between
Buyer and Seller substantially in the form attached hereto as
Exhibit C (the "Registration Rights Agreement"). Buyer hereby
undertakes to remove any legend described in Section 4.21 hereto
or to rescind any "stop transfer" instructions described in
Section 4.21 hereto (a) if Seller shall have furnished Buyer with
an opinion of counsel or other written information satisfactory
in form and content to Buyer that such legend or any such
instructions are no longer required (as applicable) or (b) with
respect to and at the time of the disposition of any such SoftKey
Shares pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act").
3.2. Standstill. At or prior to the Closing, Seller
shall enter into a Standstill Agreement with Buyer substantially
in the form attached hereto as Exhibit D (the "Standstill
Agreement").
3.3. Closing; Effectiveness of Mergers. The closing
of the transactions contemplated by this Agreement (the
"Closing") shall occur at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, at
10:00 A.M., local time, two business days after the satisfaction
of the condition set forth in Sections 7.2 and 8.2 hereof, or at
such other place and time as may be agreed upon by the parties.
The CNI Effective Time and the CLC Effective Time shall occur at
the Closing. The time and date of the Closing is sometimes
referred to herein as the "Closing Date."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and agrees as
follows:
4.1. Corporate Organization.
(a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to own or
lease its properties and to carry on its business as it is
presently being conducted.
(b) CNI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California, and CLC is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The Companies have the corporate power and authority
to own or lease their respective properties and to carry on their
respective businesses (collectively, the "NewMedia Business") as
they are presently being conducted. The Companies are duly
qualified or licensed as foreign corporations to do business and
are in good standing in the respective jurisdictions listed in
Section 4.1(b) of the disclosure schedule delivered by Seller to
Buyer on or prior to the date hereof (the "Disclosure Schedule"),
which constitute every jurisdiction where the character of the
Companies' respective properties (owned or leased) or the nature
of their respective activities makes such qualification or
licensure necessary, except for failures, if any, to be so
qualified or licensed which would not in the aggregate have a
Material Adverse Effect (as hereinafter defined). As used in
this Agreement, any reference to any event, change or effect
having a "Material Adverse Effect" shall mean that such event,
change or effect is materially adverse to the business,
operations, properties, assets (including intangible assets),
liabilities (including contingent liabilities), financial
condition or results of operations of the Companies, taken
together.
(c) Except as set forth in Section 4.1(c)(i) of
the Disclosure Schedule, the Companies do not own, directly or
indirectly, any capital stock of any corporation or have any
direct or indirect equity or ownership interest of any kind in
any business, joint venture, partnership or other entity. The
copies of the Articles of Incorporation or Certificate of
Incorporation and By-Laws of each of the Companies heretofore
delivered to Buyer and set forth in Section 4.1(c)(ii) of the
Disclosure Schedule are complete and correct copies of such
instruments as presently in effect.
4.2. Authorization. Each of Seller and the Companies
has requisite corporate power and corporate authority to enter
into this Agreement and the other agreements, documents and
instruments to be executed and delivered by each of them pursuant
hereto (the "Additional Seller's Documents") and to carry out the
transactions contemplated hereby and thereby. The Board of
Directors of Seller and the Board of Directors and sole
stockholder of each of the Companies have taken all action
required by law, their respective charters, their respective By-
Laws or otherwise to be taken by each of them to authorize the
execution, delivery and performance of this Agreement and the
Additional Seller's Documents, and when fully executed and
delivered, this Agreement and the Additional Seller's Documents
will constitute the valid and binding agreements of each of them,
as the case may be, enforceable against each of them, as the case
may be, in accordance with their respective terms.
4.3. Capitalization.
(a) As of the date and time of execution of this
Agreement, the authorized capital stock of CNI (the issued and
outstanding shares of which are referred to hereinafter as the
"CNI Shares") consists of: (i) 10,000,000 shares of CNI Common
Stock, 1,173,333 of which are issued and outstanding; and (ii)
5,000,000 shares of preferred stock, of which 762,000 shares of
Series A Preferred Stock (the "Series A Preferred Stock") are
issued and outstanding, 561,375 shares of Series B Preferred
Stock (the "Series B Preferred Stock") are issued and
outstanding, and 450,101 shares of Series C Preferred Stock (the
"Series C Preferred Stock") are issued and outstanding. All of
the CNI Shares have been validly issued, are fully paid,
nonassessable and free and clear of any mortgage, pledge,
security interest, encumbrance, lien, claim or charge of any kind
or right of others of whatever nature ("Liens"), preemptive
rights or other restrictions with respect thereto and are owned
of record and beneficially by Seller. There are no securities
outstanding which are convertible into or exercisable or
exchangeable for shares of capital stock of CNI, and there are no
outstanding options, rights, contracts, warrants, subscriptions,
conversion rights or other agreements or commitments pursuant to
which CNI may be required to purchase, redeem, issue or sell any
shares of capital stock or other securities of CNI or in any way
relating to the issuance or voting of any capital stock or other
securities of CNI.
(b) As of the date and time of execution of this
Agreement, the authorized capital stock of CLC consists of 10,000
shares of CLC Common Stock, 1,000 of which are issued and
outstanding (the "CLC Shares"). All of the CLC Shares have been
validly issued, are fully paid, nonassessable and free of any
Liens, preemptive rights or other restrictions with respect
thereto and are owned of record and beneficially by Seller.
There are no securities outstanding which are convertible into or
exercisable or exchangeable for shares of capital stock of CLC,
and there are no outstanding options, rights, contracts,
warrants, subscriptions, conversion rights or other agreements or
commitments pursuant to which CLC may be required to purchase,
redeem, issue or sell any shares of capital stock or other
securities of CLC or in any way relating to the issuance or
voting of any capital stock or other securities of CLC.
4.4. Ownership of Shares. Seller has good and valid
title to the CNI Shares and the CLC Shares, and at the CNI
Effective Time and the CLC Effective Time, respectively, Buyer
will have good and valid title to the New CNI Stock and the New
CLC Stock, in each case, free and clear of any Liens (except for
Liens created by or through Buyer).
4.5. Consents and Approvals; Non-Contravention.
Except as set forth in Section 4.5 of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement
or of any of the Additional Seller's Documents, nor the
consummation by Seller and the Companies of the transactions
contemplated hereby or thereby, nor compliance by Seller and the
Companies with any of the provisions hereof or thereof will (a)
violate any provision of the Charter or By-Laws of Seller or
either of the Companies, (b) except as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), require any filing with, or permit,
authorization, consent or approval of, any court, arbitral
tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental
Entity"), (c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller or either of the
Companies or any of their respective properties or assets or (d)
require any consent, approval or authorization under any
contract, lease or other agreement, or result in a violation or
breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or any loss of a material
benefit) under, or result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the
respective properties or assets of Seller or either of the
Companies under, any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to
which Seller or either of the Companies is a party or by which
Seller or either of the Companies or any of their respective
properties or assets may be bound, except, (i) in the case of
clause (c), for such violations of statutes, rules or
regulations, and (ii) in the case of clause (d), for such
violations, breaches, defaults or Liens which, in either such
case, would not materially impair the ability of Seller to
perform its obligations hereunder or under any other agreements
entered into between Buyer and Seller, either alone or together
with other parties thereto, as of the date of this Agreement and
which would not, either individually or in the aggregate, have a
Material Adverse Effect.
4.6. Financial Statements. The unaudited balance
sheets of each of the Companies as of December 25, 1994 and
September 24, 1995 and the unaudited operating statements of each
of the Companies for the year ended December 25, 1994 and the
nine months ended September 24, 1995, heretofore delivered to
Buyer and set forth in Section 4.6 of the Disclosure Schedule
(collectively, the "Financial Statements"), fairly present the
financial condition of each Company as of the dates and for the
periods indicated (subject in the case of interim statements to
normal recurring year-end adjustments) and, except as disclosed
in writing to Buyer in Section 4.6 of the Disclosure Schedule,
have been prepared in accordance with generally accepted
accounting principles as historically and consistently applied,
subject to the absence of footnote disclosure.
4.7. Interim Change. Since September 24, 1995, (i)
the Companies have been operating only in, and have not engaged
in any material transaction other than in, the ordinary course of
the NewMedia Business and consistent with past practice, and (ii)
neither of the Companies has (nor, as applicable, has Seller on
behalf of either of the Companies):
(a) suffered any change, nor has there occurred
or arisen any event, having or which in the future could
reasonably be expected to have a Material Adverse Effect;
(b) forgiven or cancelled any debts or claims or
waived, released or relinquished any contract right or any other
rights of the NewMedia Business other than in the ordinary course
of the NewMedia Business and consistent with past practice;
(c) paid, discharged or satisfied any Liens,
liabilities or obligations (absolute, accrued, contingent or
otherwise) other than in the ordinary course of the NewMedia
Business and consistent with past practice;
(d) suffered any damage, destruction or loss of
property, whether or not covered by insurance, which has had or
would be reasonably likely to have a Material Adverse Effect;
(e) accelerated the collection of, granted any
discounts with respect to or sold or assigned to third parties
any accounts receivable or delayed the payment of any payables of
the Companies or written off as uncollectible any accounts
receivable or any portion thereof, in each such case, other than
in the ordinary course of the NewMedia Business and consistent
with past practice;
(f) changed their respective policies with
respect to the recording of return reserve provisions or
provisions for bad debt;
(g) created, incurred or assumed any long-term
debt (including obligations in respect of capital leases), or
assumed, guaranteed, endorsed or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other individual, corporation, partnership,
joint venture, association, organization or other entity (a
"Person"), or made any loans, advances or capital contributions
to, or investment in, any other Person (other than cash advances
to employees for travel or entertainment expenses in the ordinary
course of the NewMedia Business);
(h) mortgaged, pledged or subjected to any Lien,
except for liens for current Taxes (as hereinafter defined) not
yet due, or sold, assigned or transferred, except for sales of
inventory and minor amounts of personal property in the ordinary
course of the NewMedia Business and consistent with past
practice, any of its properties or assets (real, personal or
mixed, tangible or intangible);
(i) (i) increased in any manner the wages,
salaries or other compensation of any officer or employee, except
as required under any written plan, agreement or arrangement in
effect as of September 24, 1995 and except for increases in the
ordinary course of the NewMedia Business and consistent with past
practice, (ii) paid or agreed to pay any pension, retirement
allowance or other employee benefit not required or contemplated
by any plan, agreement or arrangement in effect as of September
24, 1995 to any officer or employee or (iii) committed itself to
any additional pension, profit-sharing, bonus, severance pay,
retirement or other benefit plan, agreement or arrangement, or to
any employment or consulting agreement with or for the benefit of
any person or to amend any of such plans, agreements or
arrangement in effect as of September 24, 1995, except as may
have been required to comply with applicable law;
(j) experienced or, to Seller's knowledge, been
threatened with any work stoppage or other labor dispute or
controversy;
(k) acquired (i) by merger or consolidation with,
or by the purchase of the assets of, or by any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof or (ii) any assets that
are material in the aggregate to the Companies, except purchases
of inventory, materials and supplies in the ordinary course of
business and consistent with past practice and capital
expenditures for additions to property, plant, equipment or
intangible capital assets not exceeding $50,000 in the aggregate;
(l) entered into any agreement, contract or
commitment, other than in the ordinary course of business, with
respect to the manufacture of any software product of either of
the Companies or any update, upgrade or derivative thereof,
whether now in process, under contract or in publication, which
has ever been or is currently being produced by the Company
(collectively, the "Products");
(m) declared, paid or set aside for payment any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) directly or indirectly to
Seller (other than payments in respect of the indebtedness of CNI
or CLC to Seller);
(n) made any change in its accounting principles
or methods, except as may have been required by a change in
generally accepted accounting principles as required by the
Federal Accounting Standards Board (or another authorized
accounting body) or the SEC;
(o) amended their respective Articles of
Incorporation or By-Laws; or
(p) authorized any of, or committed or agreed,
whether in writing or otherwise, to take any of, the actions
described elsewhere in this Section 4.7.
4.8. No Undisclosed Liabilities. Except as set forth
in Section 4.8 of the Disclosure Schedule and as and to the
extent of the amounts specifically reflected or reserved against
in the Financial Statements (including without limitation
charges, accruals and reserves for Taxes), and other than current
liabilities which were incurred, and obligations under
agreements, commitments or contracts entered into, in the
ordinary course of the NewMedia Business and consistent with past
practice and not in excess of current requirements and other than
liabilities which could not reasonably be expected to have a
Material Adverse Effect, the Companies have no liabilities or
obligations of any nature (whether absolute or accrued, known or
unknown, contingent or otherwise and whether due or to become
due), including without limitation liabilities for Taxes.
4.9. Litigation. Except as set forth in Section 4.9
of the Disclosure Schedule, there is no claim, action, suit,
inquiry, proceeding or investigation by or before any
Governmental Entity pending or, to the knowledge of Seller,
threatened against Seller or either of the Companies or affecting
any of the respective properties or assets of Seller or the
Companies which could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, or
which in any manner (a) seeks injunctive or other non-monetary
relief which relief is reasonably likely to cause a Material
Adverse Effect or (b) seeks to prevent, enjoin, alter or delay
any transaction contemplated hereby. Neither Seller nor either
of the Companies is subject to any order, writ, injunction or
decree which, individually or in the aggregate, has or in the
future could reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the ability of Seller to
consummate the transactions contemplated hereby.
4.10. No Violation. Neither Seller nor either of the
Companies is in breach or violation of, or in default under (and
no event has occurred which with notice or lapse of time or both
would constitute such a breach, violation or default), any term,
condition or provision of (a) their respective Charter or By-
Laws, (b) any order, writ, decree, statute, rule or regulation
applicable to Seller or either of the Companies or any of their
respective properties or assets or (c) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other
instrument or obligation to which Seller or either of the
Companies is a party or by which Seller or either of the
Companies or any of their respective properties or assets may be
bound, except, in the case of clauses (a), (b) and (c), for such
breaches, violations or defaults, which, when taken individually
or in the aggregate, would neither materially impair the ability
of Seller to perform its obligations hereunder or under any other
agreement entered into between Buyer and Seller, either alone or
together with other parties thereto, as of the date of this
Agreement and which would not, either individually or in the
aggregate, have a Material Adverse Effect. To the best knowledge
of Seller, the Companies have, and are in compliance with, all
licenses, permits, variances, exemptions, orders, approvals and
other authorizations of all Governmental Entities as are
necessary in order to enable them to own and conduct the NewMedia
Business as currently conducted and to enter into the
transactions contemplated hereby, the lack of which, under
applicable law, rule or regulation, (x) would render legally
impermissible the transactions contemplated by this Agreement, or
(y) could reasonably be expected to have a Material Adverse
Effect.
4.11. NewMedia Business; Title to Assets.
(a) The NewMedia Business as currently conducted
consists of (i) the development, publication and worldwide
distribution of interactive multimedia CD-ROM Software in the
areas of reference (including "Xxxxxxx'x Interactive
Encyclopedia" and related titles), education, entertainment and
lifestyle and (ii) such other businesses, operations, properties,
assets (including intangible assets) and liabilities (including
contingent liabilities) as are conducted, held, utilized or had
by the Companies as of the date and time of execution of this
Agreement.
(b) Either CNI or CLC has good and marketable
title, free and clear of all Liens (other than Liens for current
taxes not yet due and minor imperfections of title or minor
encumbrances, if any, which in the aggregate do not materially
detract from the value of the property subject thereto or impair
in any material respect the continued use by the Companies of the
property subject thereto for the use being made thereof), to all
of the material assets, real property, interest in real property,
rights, franchises, licenses and properties tangible or
intangible, real or personal, wherever located, which are used in
or necessary for the conduct of the NewMedia Business in
substantially the same manner as it is presently conducted (the
"Assets"), other than Intellectual Property (as hereinafter
defined) and property that is leased or licensed. Either CNI or
CLC has valid and enforceable leases or licenses, as the case may
be, with respect to the Assets consisting of property that is
leased or licensed (other than Intellectual Property), under
which there exists no default, event of default or event which,
with notice or lapse of time or both, would constitute a default,
except for such defaults which would not have, either
individually or in the aggregate, a Material Adverse Effect.
4.12. Intellectual Property. (a) Except as set forth
in Section 4.12(a) of the Disclosure Schedule, which shall be
delivered by Seller to Buyer on or before December 15, 1995,
either CNI or CLC owns, licenses or otherwise has the right to
use, sell, or license the Intellectual Property (as defined in
this subparagraph 4.12(a)) as used in the NewMedia Business as
heretofore conducted. Section 4.12 of the Disclosure Schedule, to
be delivered by Seller to Buyer on or before December 15, 1995,
shall include a true and complete listing of the following: (i)
Section 4.12(a)(i) shall list all issued patents and pending
patent applications, registered trademarks and service marks and
applications therefor, and copyright registrations and
applications ("Registered Intellectual Property") which are owned
by CNI or CLC; (ii) Section 4.12(a)(ii) shall list all other
products and titles (including print, CD-ROM and online titles
and computer programs) which are not the subject of copyright
registrations, common law trade names, trademarks or service
marks ("Unregistered Intellectual Property") which are owned by
or licensed to CNI or CLC and which are currently used in and
necessary to the NewMedia Business as heretofore conducted ;
(iii) Section 4.12(a)(iii) shall list (X) each license or other
agreement in which CNI or CLC has licensed or granted to another
rights to or permission to use the subject matter of Registered
Intellectual Property or Unregistered Intellectual Property owned
by either CNI or CLC which is either material to the NewMedia
Business as heretofore conducted or in which such grant or
license is exclusive in whole or in part ("Licensor Agreements")
and (Y) each material license or other agreement in which CNI or
CLC has been licensed or otherwise received from another rights
to or permission to use Registered Intellectual Property or
Unregistered Intellectual Property of another ("Licensee
Agreements"); (all of the foregoing collectively referred to
herein as "Intellectual Property"). For purposes of (Y) above,
the term "material" refers to materiality to any individual
product, title or product line currently used in and necessary to
the NewMedia Business as heretofore conducted.
(b) Except as set forth in Section 4.12 (b) of
the Disclosure Schedule, which shall be delivered by Seller to
Buyer on or before December 15, 1995:
(i) either CNI or CLC has the sole and
exclusive right to use, sell, license, or bring actions for the
infringement of its rights to the Intellectual Property used in
the NewMedia Business as heretofore conducted, as the case may
be, subject to rights of such third rights as are set forth in
Section 4.12(b)(i) of the Disclosure Schedule;
(ii) the consummation of the transaction
contemplated hereby will not (i) give rise to any right of
termination, amendment, renegotiation, cancellation or
acceleration with respect to any Licensor Agreements or Licensee
Agreements so as to have a Material Adverse Effect on the
NewMedia Business as presently conducted or (ii) have a Material
Adverse Effect on the NewMedia Business as presently conducted so
as to impair the right of either of the Companies to use, sell,
license, or bring actions for the infringement of either of the
Companies' rights to the Intellectual Property or any portion
thereof;
(iii) all Registered Intellectual Property
owned by the Companies is duly subsisting and the registrations
therefor are not subject to any pending claim, ruling, or order
to the effect that they are lapsed, abandoned, invalid or
cancelled;
(iv) no former or present employees, officers
or directors of either of the Companies holds any right, title or
interest, directly or indirectly, in whole or in part, in or to
any Intellectual Property which either of the Companies currently
uses, sells, or licenses, or the use, sale or licensure of which
is necessary for the conduct of the NewMedia Business as
presently conducted;
(v) neither Seller nor either of the
Companies is a party to any employment contract, patent
disclosure agreement or any other contract or agreement relating
to the relationship of any employee of Seller (working in or
supporting the NewMedia Business) or either of the Companies
relating in any way to Intellectual Property owned by CNI or CLC;
(vi) each Licensor Agreement and Licensee
Agreement is a valid, legally binding obligation of CNI or CLC,
enforceable in accordance with its terms, and neither CNI or CLC
is in breach, violation, default or termination thereof (and no
event has occurred which with the giving of notice or the passage
of time or both would constitute such a breach, violation,
default or termination or give rise to any right of termination,
amendment, renegotiation, cancellation or acceleration under any
such Licensor Agreement or Licensee Agreement) so as to have a
Material Adverse Effect on the NewMedia Business as presently
conducted, and neither Seller nor either of the Companies has
knowledge of any facts that would constitute a breach, violation,
default or termination by any other party to any such Licensor
Agreement or Licensee Agreement so as to have a Material Adverse
Effect on the NewMedia Business as a whole;
(vii) to the best knowledge of Seller, the
manufacture, marketing, use, sale or licensure of any
Intellectual Property currently made, marketed, used, sold or
licensed by either of the Companies does not violate any license
or agreement with any third party or infringe any patent,
trademark, copyright, trade secret, publicity right or similar
intellectual property rights of any Person so as to have a
Material Adverse Effect on the NewMedia Business as presently
conducted, nor has such an infringement been alleged within the
preceding three years; there is no pending or, to the best
knowledge of Seller, threatened claim or litigation challenging
or questioning the validity, ownership or right to use, sell, or
license of any Intellectual Property so as to have a Material
Adverse Effect upon the NewMedia Business as presently conducted,
nor, to the best knowledge of Seller, is there a valid basis for
any such claim, nor has Seller or either Company received any
notice asserting that the proposed use, sale, or licensure by
either of the Companies of any of their respective Intellectual
Property conflicts with or will conflict with the rights of any
other party so as to have a Material Adverse Effect upon the
NewMedia Business as presently conducted, nor is there, to the
best knowledge of Seller, a valid basis for any such claim or
assertion; and
(viii) neither Seller nor either of the
Companies has asserted any claim of infringement,
misappropriation or misuse within the past three years with
respect to any Intellectual Property owned by CNI or CLC and used
in connection with the NewMedia Business;
(ix) the Intellectual Property owned by CNI
and CLC is not subject to any liens, security interests, pledges,
mortgages, or other encumbrances.
(c) To the best knowledge of Seller, the
exceptions to be set forth on Section 4.12 of the Disclosure
Schedule shall not, either individually or in the aggregate,
create or constitute a Material Adverse Effect with respect to
the Intellectual Property as used in the NewMedia Business as
heretofore conducted; it being understood that any exceptions set
forth in Section 4.12 of the Disclosure Schedule relating to the
use of any photographs in any online application shall not
constitute a Material Adverse Effect.
4.13. Contracts and Commitments.
(a) A complete and accurate list of all of the
following contracts and agreements (whether written or oral) of
the Companies (such contracts and agreements, the contracts and
agreements as set forth in Section 4.13(b) of the Disclosure
Schedule and all agreements relating to Intellectual Property set
forth in Section 4.12 of the Disclosure Schedule being "Material
Contracts") shall be delivered by Seller to Buyer on or before
December 15, 1995 and shall constitute Section 4.13(a) of the
Disclosure Schedule:
(i) agreements providing for royalty
obligations relating to any of the Products which has generated
at least $250,000 in revenue within the Companies' last three
fiscal years or which is reasonably anticipated to generate
revenue of at least $250,000 in fiscal year 1995 or fiscal year
1996;
(ii) agreements providing for advances made
with respect to or on account of the Products which remain
outstanding and which have not been written off;
(iii) (A) editorial development agreements
relating to the Products which have involved or are reasonably
anticipated to involve commitments of over $50,000 and which have
not been fully performed and (B) distributor, dealer or
manufacturer's representative contracts or agreements relating to
the Products which are currently offered for sale by either of
the Companies (to the extent the obligations under such
agreements are not reflected on the Disclosure Schedule lists
provided pursuant to Section 4.13(a)(i) and (ii));
(iv) distributor, dealer or manufacturer's
representative contracts or agreements which are not terminable
on less than 90 days notice without cost or other liability to
the Company or Companies party thereto (except for contracts
which, in the aggregate, are not material to the NewMedia
Business);
(v) sales contracts which entitle any
customer to a rebate or right of set-off, to return any product
to either of the Companies after acceptance thereof or to delay
the acceptance thereof;
(vi) contracts or other commitments with any
supplier containing any provision permitting any party other than
the Company or Companies party thereto to renegotiate the price
or other terms, or containing any pay-back or other similar
provision, upon the occurrence of a failure by that Company to
meet its obligations under the contract when due or the
occurrence of any other event;
(vii) credit agreements, notes, indentures,
security agreements, pledges, guarantees of or agreements to
acquire any such debt obligation of others or similar documents
relating to indebtedness for borrowed money (including without
limitation interest rate or currency swaps, xxxxxx or straddles
or similar transactions) to which either of the Companies is a
party or by which any of their respective assets are bound,
restricted or encumbered;
(viii) all employment, consulting, severance
or termination agreements which require or may require either of
the Companies to pay more than $50,000 in base salary in the case
of employment contracts in any 12-month period;
(ix) agreement, or group of related
agreements with the same party or any group of affiliated
parties, requiring payments in excess of $50,000 per year, under
which either of the Companies has leased or has agreed to lease
any property as lessee or lessor;
(x) all deeds, title documents, title
reports or similar documents related to any real property owned
by either of the Companies; and
(xi) all contracts, agreements, arrangements
or understandings with Seller or any affiliate or associate (as
such terms are defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended) of Seller, together with a
description of the nature of any applicable affiliate or
associate relationship.
(b) Except as set forth in Section 4.13(b) of the
Disclosure Schedule, which shall be delivered by Seller to Buyer
on or before December 15, 1995:
(i) no supply or purchase contract of either
of the Companies (or group of related contracts with the same
party): (A) continues for a period of more than six months
(including renewals or extensions at the option of another
party); (B) requires payment by the Company or Companies party
thereto of more than $50,000 in any 12-month period; or (C) is
not terminable by the Company or Companies party thereto without
penalty upon notice of 30 days or less (excluding any contract or
group of contracts with a customer of either of the Companies for
the sale, lease, license or rental of Products of either of the
Companies if such contract or group of contracts was entered into
in the ordinary course of the NewMedia Business);
(ii) neither of the Companies has any
agreement, arrangement or understanding with respect to payment
of (A) minimum royalty or license fees or (B) fees, costs and
expenses in connection with "work for hire" which, in the case of
any such agreement, arrangement or understanding or group of
related agreements, arrangements or understandings, provide for
payments in excess of $150,000;
(iii) neither of the Companies has any
outstanding contract with respect to the employment of any
officer, individual, employee, agent, consultant, adviser,
salesperson, representative or other person (whether of a legally
binding nature or in the nature of informal understandings) on a
full-time, part-time, contract or consulting basis which is not
terminable by the Company or Companies party thereto on notice of
30 days or less without cost or other liability to the Company or
Companies party thereto, including without limitation any penalty
or premium or provision for the payment of any bonus or
commission based on sales or earnings;
(iv) neither of the Companies has any
pension, profit-sharing, bonus, severance pay, retirement,
hospitalization, insurance, stock purchase, stock option or other
benefit plan, arrangement, understanding or agreement with or for
the benefit of any Person (a "Benefit Plan") or any other
employment or consulting agreement that contains any severance or
termination pay, liability or obligation;
(v) neither of the Companies has any Benefit
Plan other than group insurance plans applicable to employees
generally;
(vi) neither of the Companies has any
employee to whom it is paying base salary at an annual rate of
more than $100,000 for services rendered;
(vii) neither of the Companies is restricted
by any agreement from carrying on the NewMedia Business in any
material respect anywhere in the world (other than by geographic
or use restrictions contained in licenses relating to
Intellectual Property);
(viii) neither of the Companies has any
outstanding loan to any Person, other than travel advances to
employees for travel and entertainment expenses in the ordinary
course of the NewMedia Business;
(ix) neither of the Companies has any power
of attorney outstanding (except those granted in the ordinary
course of the NewMedia Business) or any obligation or liability
(whether absolute, accrued, contingent or otherwise), as surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect
of the obligation of any Person;
(x) there exists no voting trust,
stockholders' agreement, pledge agreement or buy-sell agreement
relating to any securities of either of the Companies which is or
will be in effect as of the Closing;
(xi) neither of the Companies has any
agreement or obligation (contingent or otherwise) to issue or
sell or to repurchase or otherwise acquire or retire any shares
of its capital stock or any of its other equity securities; and
(xii) neither of the Companies has any other
contract which is material to its business, operations or
prospects or any other contract, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed with
the SEC as an exhibit to a registration statement on Form S-1, if
that Company were registering securities under the Securities
Act.
(c) The Material Contracts constitute all
contracts, agreements and arrangements necessary for the conduct
of the NewMedia Business in substantially the same manner as it
is presently conducted. Each Material Contract is, to the best
knowledge of Seller, valid and binding on the other party or
parties thereto (subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors' rights and remedies generally and general principles
of equity) and is in full force and effect and shall continue in
full force and effect without penalty or other adverse
consequence. Neither of the Companies nor, to the best knowledge
of Seller, any other party to any Material Contract is in breach
of, or default under, any Material Contract, which breach or
default has or could reasonably be expected to have a Material
Adverse Effect.
4.14. Customers and Suppliers. A list of (a) the ten
largest customers of the Companies, taken together, in terms of
sales during the nine months ended September 24, 1995, showing
the approximate total sales by the Companies to each such
customer during the nine months ended September 24, 1995 and (b)
the ten largest suppliers of goods and materials to the
Companies, taken together, in terms of purchases during the nine
months ended September 24, 1995, showing the approximate total
purchases by the Companies from each supplier during the nine
months ended September 24, 1995 shall be delivered by Seller to
Buyer on or before December 15, 1995 and shall constitute
Sections 4.14(a) and 4.14(b), respectively, of the Disclosure
Schedule. Except to the extent set forth in Section 4.14(c) of
the Disclosure Schedule, there have not been any adverse changes
in the business relationship of the Companies with any customers
or suppliers since September 24, 1995 which could reasonably be
expected to have in the aggregate a Material Adverse Effect.
4.15. Products.
(a) A summary of product information consisting
of: (i) a complete and accurate list of all Products currently
developed, licensed, manufactured, sold, distributed or otherwise
published by either of the Companies ("Current Products"),
setting forth the specific nature of the arrangement as to any of
the foregoing, the date of any agreement with respect thereto and
any other material provisions of any such arrangement; (ii) if
applicable, the current version number of each Current Product;
and (iii) information as to whether all rights to each Current
Product and its software code are owned by either of the
Companies or are licensed from one or more third parties, naming
any such third party, shall be delivered by Seller to Buyer on or
before the earlier to occur of the Closing Date or December 31,
1995 and shall constitute Section 4.15(a) of the Disclosure
Schedule.
(b) A list of all license or other agreements
pursuant to which any part or component of any Current Product is
licensed by either of the Companies from a third party and a
detailed description of the part or component so licensed shall
be delivered by Seller to Buyer on or before the earlier to occur
of the Closing Date or December 31, 1995 and shall constitute
Section 4.15(b) of the Disclosure Schedule.
(c) A detailed description of the video clips,
audio clips, photography, animations and other "content" files
utilized or incorporated in any Current Product, including
information as to (i) whether such files are owned by either of
the Companies or licensed from a third party and (ii) the sources
of such files shall be delivered by Seller to Buyer on or before
the earlier to occur of the Closing Date or December 31, 1995 and
shall constitute Section 4.15(c) of the Disclosure Schedule.
4.16. Returns. The general returns policy of the
Companies is as set forth in Section 4.16 of the Disclosure
Schedule.
4.17. Competition. Except as set forth in Section
4.17 of the Disclosure Schedule, Seller does not own, directly or
indirectly, any capital stock or other equity securities of, has
no direct or indirect equity or ownership interest in, and is not
serving as a director, officer, employee or consultant of any
Person which competes with, or conducts the same business as,
either of the Companies.
4.18. Insurance. A list of all policies or binders of
insurance held by or on behalf of either of the Companies
(specifying the insurer, amount of the coverage, type of
insurance, expiration date of each policy, risks insured and any
pending claims thereunder) shall be delivered by Seller to Buyer
on or before December 15, 1995 and shall constitute Section
4.18(a) of the Disclosure Schedule. There has not been any
failure to give any notice or present any material claim under
any such policy or binder in a timely fashion or in the manner or
detail required by the policy or binder. There are no
outstanding past due premiums or claims, and there are no
provisions for retroactive or retrospective premium adjustments.
No notice of cancellation or non- renewal with respect to, or
disallowance of any claim under, any such policy or binder has
been received by the Seller or either of the Companies or any
director or officer thereof since December 1, 1993. A
description of all outstanding bonds and other surety
arrangements issued or entered into in connection with the
NewMedia Business shall be delivered by Seller to Buyer on or
before December 15, 1995 and shall constitute Section 4.18(b) of
the Disclosure Schedule.
4.19. Access to Buyer Information. Seller hereby
represents that (a) it has been furnished by Buyer during the
course of this transaction with all information regarding Buyer
which it had requested, (b) all documents that have been
reasonably requested by Seller have been made available for
Seller's or Seller's counsel's inspection and review, (c) it has
been afforded the opportunity for its duly authorized officers
and other representatives to ask questions of and receive answers
from duly authorized officers or other representatives of Buyer
concerning the terms and conditions of the issuance and delivery
of the SoftKey Shares to Seller by Buyer in the Mergers and (d)
any other additional information which it has requested has been
provided.
4.20. Seller's Investment Intent. Seller represents
that the SoftKey Shares being issued and delivered to it
hereunder are being acquired for its own account, for investment
for an indefinite period of time, not as nominee or agent for any
other person, firm or corporation and not for distribution or
resale to others; provided, however, that the parties hereto
acknowledge that Seller may dispose of some or all of its SoftKey
Shares pursuant to an effective registration statement under the
Securities Act, or in any transaction exempt from registration
under the Securities Act. Seller agrees that it will not sell or
otherwise transfer its SoftKey Shares unless they are registered
under the Securities Act or unless an exemption from such
registration is available.
4.21. Securities Legend; Stop Transfer Instructions.
Seller consents to the placement of a legend on any certificate
or other document evidencing its SoftKey Shares, stating that
such SoftKey Shares have not been registered under the Securities
Act or any state securities or "blue sky" laws and setting forth
or referring to the restrictions on transferability and sale
thereof, including the restrictions set forth herein. Seller is
aware that Buyer will make a notation in its appropriate records
with respect to the restrictions on the transferability of such
SoftKey Shares. Seller also consents and acknowledges that "stop
transfer" instructions may be noted against the SoftKey Shares
received by it hereunder.
4.22. Environmental Matters.
(a) To the knowledge of Seller, during any period
that either of the Companies has leased or owned its properties
or owned or operated any facilities, there have not been any
disposals, releases or, to the best knowledge of Seller,
threatened releases of oil or petroleum or Hazardous Materials
(as hereinafter defined) on, from or under such properties or
facilities. For the purposes of this Agreement, the terms
"facility," "disposal," "release" and "threatened release" shall
have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. SECTION 9601 et seq., as amended ("CERCLA"). For the
purposes of this Agreement, "Hazardous Materials" shall mean any
hazardous or toxic substance, material or waste which is or
becomes prior to the Closing regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic
chemical," "hazardous materials," "toxic substance" or "hazardous
chemical" under: (i) CERCLA; (ii) any similar federal, state or
local law; or (iii) regulations promulgated under any of the
above laws or statutes.
(b) To the best knowledge of Seller, none of the
properties, facilities or operations of either of the Companies
is in violation of any federal, state or local law, ordinance,
regulation or order relating to industrial hygiene or to the
environmental conditions on, under or about such properties or
facilities, including, but not limited to, soil and ground water
condition. To the knowledge of Seller, during the time that the
Companies have owned or leased their respective properties and
facilities, neither of the Companies has used, generated,
manufactured or stored on, under or about such properties or
facilities or transported to or from such properties or
facilities any Hazardous Materials.
(c) To the knowledge of Seller, during the time
that the Companies have owned or leased their respective
properties and facilities, there has been no litigation brought
or, to the best knowledge of Seller, threatened against and no
request for information made to Seller or either of the Companies
by, or any settlement reached by Seller or either of the
Companies with, any party or parties alleging the presence,
disposal, release or threatened release of any oil or petroleum
or Hazardous Materials on, from or under any of such properties
or facilities.
4.23. Taxes.
(a) Except as disclosed in Section 4.23 of the
Disclosure Schedule:
(i) all returns, declarations, reports,
estimates, information returns, and statements (collectively,
"Tax Returns") required to be filed by or on behalf of either of
the Companies (including without limitation any consolidated or
combined Tax Returns which include either of the Companies) for
all periods ending on or before the Closing Date have been (or
will be) timely filed (except for failures to so file which do
not, in the aggregate, constitute a Material Adverse Effect and
except for Tax Returns which Buyer is responsible for filing
under the Tax Sharing Agreement (as hereinafter defined)), and
all such Tax Returns are true, correct and complete (except for
misrepresentations and omissions which do not, in the aggregate,
constitute a Material Adverse Effect); neither of the Companies
is required to file (or be included in) any material state Tax
Returns other than in the State of California or the State of
Delaware;
(ii) the Companies have timely paid (or
Seller has paid on their behalf) all Taxes due or claimed to be
due by either of them by any federal, state, local or foreign
taxing authority;
(iii) there are no liens for Taxes upon the
assets of either of the Companies except liens for Taxes not yet
due and payable;
(iv) no deficiency for any Taxes has been
proposed, asserted or assessed against Seller (as to either of
the Companies) or against either of the Companies which has not
been resolved and paid in full; there are no outstanding waivers,
extensions or comparable consents regarding the application of
the statute of limitations with respect to any Taxes or Tax
Returns that have been given by or on behalf of either of the
Companies (including the time for filing of Tax Returns or paying
Taxes) and there are no pending requests for any such waivers,
extensions or comparable consents;
(v) no audit or other proceeding by any
federal, state, local or foreign court, governmental, regulatory,
administrative or similar authority is presently pending (or is
the subject of a written notice) with respect to any Taxes or Tax
Return of either of the Companies (or with respect to any Tax
Return of Seller which relates to Taxes of either of the
Companies); provided, however, that the description of any such
audit or proceeding disclosed in Schedule 4.23(a)(v) shall set
forth the nature of the audit or proceeding, the type of Tax
Return, any deficiencies proposed, asserted or assessed and the
amount thereof and the tax year in question;
(vi) neither Seller (as to either of the
Companies) nor either of the Companies is a party to, is bound by
or has any obligation under any Tax allocation, indemnity, or
sharing agreement or similar contract or arrangement, except as
provided for herein;
(vii) neither Seller (as to either of the
Companies) nor either of the Companies has made any change in
accounting methods, received a ruling from any taxing authority
or signed an agreement with any taxing authority which is
reasonably likely to have a Material Adverse Effect;
(viii) Seller (as to the Companies and the
NewMedia Business) and the Companies have each complied in all
material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes of the Companies
(including, without limitation, withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under
any foreign laws) and have each, within the time and the manner
prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all amounts required to be so
withheld and paid over under applicable laws;
(ix) no power of attorney granted by Seller
(as to either of the Companies) or by either of the Companies
with respect to any Taxes is currently in force;
(x) neither Seller (as to either of the
Companies) nor either of the Companies has, with regard to any
assets or property held, acquired or to be acquired by any of
them, filed a consent to the application of Section 341(f) of the
Code, or agreed to have Section 341(f)(2) of the Code apply to
any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by either of the
Companies;
(xi) neither Seller (as to either of the
Companies) nor either of the Companies is a party to any
agreement, contract or arrangement that could result, separately
or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code;
(xii) neither of the Companies is, nor has
been during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code, a United States real property
holding company (as defined in Section 897(c)(2) of the Code);
(xiii) neither the Companies nor the Seller
(nor any member of a "controlled group" (within the meaning of
Section 993(a)(3) of the Code) that includes either of the
Companies or the Seller) have participated in, or cooperated
with, an "international boycott" within the meaning of Section
999 of the Code;
(xiv) neither of the Companies is subject to
any joint venture, partnership or other arrangement or contract
that is treated as a partnership for U.S. federal income tax
purposes; and
(xv) excluding any liability (under U.S.
Treasury Regulation SECTION 1.1502-6) for U.S. federal income taxes of
the affiliated group of corporations of which Seller is the
common parent corporation and which includes the Companies,
neither of the Companies is subject to liability for Taxes of any
other person, including, without limitation, liability arising
from the application of U.S. Treasury Regulation SECTION 1.1502-6 or
any analogous provision of Tax law.
(b) For purposes of this Agreement, "Taxes"
(including, with correlative meaning, the term "Tax") shall mean
all taxes, charges, fees, levies or other assessments, including,
without limitation, all net income, gross income, gross receipts,
sales, use, service, service use, ad valorem, transfer,
franchise, profits, license, withholding, Social Security,
payroll, employment, excise, estimated, severance, stamp,
recording, occupation, property or other taxes, customs duties,
fees, assessments or charges of any kind whatsoever, whether
computed on a separate, consolidated, unitary or combined basis,
together with any interest, fines, penalties, additions to tax or
other additional amounts imposed thereon or with respect thereto,
by any taxing authority (domestic or foreign).
4.24. Benefit Plans.
(a) A true and complete list of each Benefit
Plan, and each other "employee benefit plan" (within the meaning
of Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA")), that is or was maintained or contributed
to by either of the Companies or any affiliate of either of the
Companies or by any trade or business, whether or not
incorporated, which together with either of the Companies would
be deemed a "single employer" within the meaning of Section 4001
of ERISA (an "ERISA Affiliate") within the last three years, for
the benefit of any employee, former employee, consultant, officer
or director of either of the Companies or any ERISA Affiliate (an
"ERISA Plan") shall be delivered by Seller to Buyer on or before
December 15, 1995 and shall constitute Section 4.24 of the
Disclosure Schedule. Neither Seller nor either of the Companies
has any commitment, whether formal or informal and whether
legally binding or not, to create any additional ERISA Plan which
could have a Material Adverse Effect.
(b) No ERISA Plan is a "multiemployer plan," as
such term is defined in Section 3(37) of ERISA; no ERISA Plan is
subject to Section 412 of the Code or Title IV of ERISA; each of
the ERISA Plans is, and has always been, operated in all material
respects in accordance with the requirements of all applicable
laws, and all persons who participate in the operation of such
ERISA Plans and all ERISA Plan "fiduciaries" (within the meaning
of Section 3(21) of ERISA) have always acted substantially in
accordance with the provisions of all applicable laws. None of
the ERISA Plans is intended to be "qualified" within the meaning
of Section 401(a) of the Code; no ERISA Plan has an accumulated
or waived funding deficiency within the meaning of Section 412 of
the Code; within the past six years no "reportable event," as
such term is defined in Section 4043(b) of ERISA, has occurred
with respect to any ERISA Plan; and no condition exists that
presents a material risk to either of the Companies or any ERISA
Affiliate of incurring a liability to or on account of an ERISA
Plan pursuant to Title IV of ERISA.
(c) Full payment has been made, or will be made
in accordance with Section 404(a)(6) of the Code, of all amounts
which either of the Companies or any ERISA Affiliate is required
to pay under the terms of each of the ERISA Plans as of the last
day of the most recent plan year thereof ended prior to the date
of this Agreement, and all such amounts properly accrued through
the Closing Date with respect to the current plan year thereof
have been paid by or on behalf of either of the Companies or are
properly reflected in accordance with GAAP on the financial
statements of the Companies.
(d) No ERISA Plan provides benefits, including,
without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of either
of the Companies or any ERISA Affiliate for periods extending
beyond their retirement or other termination of service for which
either of the Companies are or could be liable.
(e) There has been no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of
the Code) with respect to any ERISA Plan; neither of the
Companies has incurred any material liability for any excise tax
arising under Section 4972 or 4980B of the Code and no fact or
event exists that could reasonably give rise to any such
liability with respect to the filing of reports with respect to
any ERISA Plan; there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of
or against any of the ERISA Plans, or any trusts related thereto
or any trustee or administrator thereof, and no material
litigation or administrative or other proceeding (including,
without limitation, any litigation or proceeding under Title IV
of ERISA) has occurred or, to the best knowledge of Seller, is
threatened involving any ERISA Plan or any trusts related thereto
or any trustee or administrator thereof.
(f) Except as set forth in Section 4.24 of the
Disclosure Schedule or as expressly provided herein, the
consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or officer of
either of the Companies to severance pay, unemployment
compensation or any other similar payment, (ii) accelerate the
time of payment or vesting or increase the amount of compensation
due any such employee or officer, (iii) result in any employment-
related expenses or liabilities the full cost of which will not
be paid by Seller or (iv) result in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code for
which an exemption is not available.
(g) No employee, officer or director of either of
the Companies will be entitled to receive any compensation,
remuneration or financial benefit of any kind resulting from this
Agreement or the transactions contemplated hereby, except as
expressly provided herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer hereby represents and warrants to Seller as
follows:
5.1. Corporate Organization. Buyer and CUBSCO II are
corporations duly organized, validly existing and in good
standing under the laws of the State of Delaware. CUBSCO I is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California.
5.2. Authorization. Each of Buyer and CUBSCO I and
CUBSCO II has the requisite corporate power and corporate
authority to enter into this Agreement and the other agreements,
documents and instruments to be executed and delivered by each of
them pursuant hereto (the "Additional Buyer's Documents") and to
carry out the transactions contemplated hereby and thereby. The
Boards of Directors of Buyer, CUBSCO I and CUBSCO II and the sole
stockholder of CUBSCO I and CUBSCO II have taken all actions
required by law, their respective charters, their respective By-
Laws or otherwise to be taken by each of them to authorize the
execution, delivery and performance of this Agreement and the
Additional Buyer's Documents, and when fully executed and
delivered, this Agreement and each of the Additional Buyer's
Documents will constitute the valid and binding agreements of
each of them, as the case may be, enforceable against each of
them, as the case may be, in accordance with their respective
terms.
5.3. SEC Filings.
(a) Buyer has filed all forms, reports and
documents (the "SEC Reports") required to be filed by it with the
SEC since January 1, 1995. The SEC Reports (i) were prepared in
accordance with the requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended, as the case may be,
and the rules and regulations thereunder, as amended
(collectively, the "Rules and Regulations"), and (ii) did not at
the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the SEC
Reports was prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in
the notes thereto), and each fairly presented the consolidated
financial position, results of operations and changes in
financial position of Buyer and its consolidated subsidiaries as
of the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in
the case of unaudited statements, to normal and recurring year-
end adjustments which were not and are not expected, individually
or in the aggregate, to have a material adverse effect on Buyer).
5.4. Authorization and Issuance of SoftKey Shares.
The issuance of the SoftKey Shares has been duly authorized by
Buyer, and upon delivery to Seller of the certificates therefor
in accordance with Articles I and II hereof, the SoftKey Shares
will be validly issued, fully paid and nonassessable, free and
clear of all Liens and restrictions other than the restrictions
imposed herein or by the Rules and Regulations.
5.5. Consents and Approvals; Non-Contravention.
Neither the execution, delivery or performance of this Agreement
or any of the Additional Buyer's Documents by Buyer, CUBSCO I or
CUBSCO II nor the consummation by each of them of the
transactions contemplated hereby or thereby nor compliance by
each of them with any of the provisions hereof or thereof will
(a) violate any provision of the Restated Certificate of
Incorporation, as amended, or By-Laws of Buyer or the
Certificates of Incorporation of CUBSCO I or CUBSCO II, (b)
except as may be required under the HSR Act, require any filing
with, or permit, authorization, consent or approval of, any
Governmental Entity, (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Buyer or any of
its properties or assets, (d) violate any contract to which Buyer
is a party or by which it is bound or (e) violate any applicable
law, statute, ordinance, rule or regulation, except in the case
of clauses (c) and (d), for such violations which would not
materially impair the ability of Buyer to perform its obligations
hereunder or under any agreements entered into between Buyer and
Seller, either alone or together with any other parties thereto,
as of the date of this Agreement and which would not,
individually or in the aggregate, have a material adverse effect
on Buyer.
5.6. Litigation. There is no claim, action, suit,
inquiry, proceeding or investigation by or before any
Governmental Entity pending or, to Buyer's knowledge, threatened
against or involving Buyer which in any manner seeks injunctive
or other non-monetary relief with respect to the transactions
contemplated hereby or otherwise seeks to prevent, enjoin, alter
or delay any transaction contemplated hereby, nor is there any
basis for any such claim, action, suit, inquiry, proceeding or
investigation. Buyer is not subject to any order, writ,
injunction or decree which, individually or in the aggregate, has
or in the future would have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated
hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Consents and Other Approvals. Buyer and Seller
shall, and Seller shall cause the Companies to, use their
respective best efforts to comply promptly with all legal
requirements which may be imposed on itself with respect to the
transactions contemplated hereby and will promptly cooperate with
and furnish information to each other in connection with any such
requirements imposed on any of them in connection with the
transactions contemplated hereby. Buyer and Seller shall, and
Seller shall cause the Companies to, use their respective best
efforts to obtain (and shall cooperate with each other in
obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by Buyer,
Seller or either of the Companies in connection with the
transactions contemplated hereby.
6.2. Related Agreements and Instruments.
(a) Buyer and Seller each agree to execute and
deliver the Registration Rights Agreement on or prior to the
Closing Date.
(b) Seller and Buyer each agree to execute and
deliver the Standstill Agreement on or prior to the Closing Date.
(c) Seller agrees to present evidence
satisfactory to Buyer, prior to the Closing Date, of the full
amount of all indebtedness of CNI to Seller and Seller's
affiliates as of the Closing. Buyer agrees either: (i) to
execute and deliver to Seller a promissory note for the full
amount of all indebtedness of CNI to Seller and Seller's
affiliates as of the Closing (but in no event in an amount
greater than $17 million) substantially in the form attached
hereto as Exhibit E in full satisfaction of all indebtedness of
CNI to Seller and Seller's affiliates as of the Closing (the
"Buyer's Note") or (ii) to issue and deliver to Seller at the
Closing, in full satisfaction of all indebtedness of CNI to
Seller and Seller's affiliates as of the Closing, the number of
shares of SoftKey Common Stock obtained by dividing the full
amount of all indebtedness of CNI to Seller and Seller's
affiliates as of the Closing (but in no event in an amount
greater than $17 million) by the volume-weighted average of the
closing prices for SoftKey Common Stock as quoted over the Nasdaq
National Market for the 10 full trading days ending on the second
full trading day prior to the Closing. All indebtedness of CLC
to Seller and Seller's affiliates will be cancelled immediately
prior to the Closing.
(d) CNI, CLC, Seller and Buyer each agree to
execute and deliver to the other parties on or prior to the
Closing Date a Tax Sharing Agreement in the form attached hereto
as Exhibit F (the "Tax Sharing Agreement").
(e) Seller agrees to execute and deliver a
certificate satisfying the requirements of Section 1445(b)(2) or
Section 1445(b)(3) of the Code, as the case may be, in either
case, in form and substance satisfactory to Buyer (the "Tax
Certificate").
6.3. Conduct of the NewMedia Business. Prior to the
Closing, unless Buyer shall otherwise agree in writing, or as
otherwise expressly contemplated by this Agreement:
(a) the Companies shall conduct the NewMedia
Business only in the ordinary and usual course consistent with
past practice, and the Companies shall use all reasonable efforts
to preserve intact the present business organization, keep
available the services of their respective present officers and
key employees, and preserve the goodwill of those having business
relationships with each of them;
(b) neither of the Companies shall (i) amend its
Articles of Incorporation, By-Laws or other organizational
documents, (ii) split, combine or reclassify any shares of its
outstanding capital stock, (iii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property
(except that the Companies are permitted to make a distribution
to Seller of any receivable owing to Seller to the extent arising
under any existing tax sharing agreement between Seller and
either of the Companies) or (iv) directly or indirectly redeem or
otherwise acquire any shares of its capital stock;
(c) neither of the Companies shall (i) authorize
for issuance, issue or sell or agree to issue or sell any shares
of, or rights or securities of any kind to acquire, or rights or
securities convertible into, any shares of its capital stock
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise);
(ii) merge or consolidate with another entity; (iii) acquire or
purchase an equity interest in or a substantial portion of the
assets of another entity or otherwise acquire any assets outside
the ordinary course of the NewMedia Business and consistent with
past practice or otherwise enter into any material contract,
commitment or transaction outside the ordinary course of the
NewMedia Business and consistent with past practice; (iv) sell,
lease, license, waive, release, transfer, encumber or otherwise
dispose of any of its assets outside the ordinary course of the
NewMedia Business and consistent with past practice; (v) incur,
assume or prepay any material indebtedness or any other material
liabilities other than in the ordinary course of the NewMedia
Business and consistent with past practice; (vi) incur or assume
any additional indebtedness to Seller or any of Seller's
affiliates other than in the ordinary course of the NewMedia
Business and consistent with past practice; (vii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations
of any other Person other than in the ordinary course of the
NewMedia Business and consistent with past practice; (viii) make
any loans, advances or capital contributions to, or investments
in, any other Person (other than cash advances to employees for
travel or entertainment expenses in the ordinary course of the
NewMedia Business); (ix) authorize or make capital therefor; (x)
permit any insurance policy naming either of the Companies as a
beneficiary or a loss payee to be cancelled or terminated other
than in the ordinary course of the NewMedia Business; or (xi)
enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(d) neither of the Companies shall (i) adopt,
enter into, terminate or amend (except as may be required by
applicable law) any Benefit Plan or other arrangement for the
current or future benefit or welfare of any director, officer or
current or former employee, (ii) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases in
compensation (including without limitation salary and bonus) in
the ordinary course of the NewMedia Business and consistent with
past practice) or (iii) take any action to fund or in any other
way secure, or to accelerate or otherwise remove restrictions
with respect to, the payment of compensation or benefits under
any Benefit Plan;
(e) neither of the Companies shall take any
action with respect to, or make any material change in, its
accounting policies or procedures, except as may be required by a
change in generally accepted accounting principles as required by
the Federal Accounting Standards Board (or another authorized
accounting body) or the SEC;
(f) neither of the Companies shall knowingly take
any action which would jeopardize qualification of the Mergers as
reorganizations within the meaning of Section 368(a) of the Code;
and
(g) neither of the Companies shall make any Tax
election or settle or compromise any income Tax liability or file
any income Tax Return prior to the last day (including
extensions) prescribed by law, which election, liability or Tax
Return is material to the business, financial condition or
results of operations of the Companies or the NewMedia Business.
6.4. Audited Financial Statements. Seller shall
provide Buyer with audited financial statements of the Companies
as of and for the years ended December 26, 1993 and December 25,
1994 (and, if the Closing shall occur after December 31, 1995, as
of and for the year ended December 31, 1995) at or prior to the
Closing or as soon as practicable after the Closing.
6.5. Conveyance Taxes. Seller and Buyer shall
cooperate in the preparation, execution and filing of all
returns, questionnaires, applications or other documents
regarding (i) any real property transfer gains, sales, use,
transfer, value-added, stock transfer and stamp Taxes, (ii) any
recording, registration and other fees and (iii) any similar
Taxes or fees that become payable in connection with the
transactions contemplated hereby that are required or permitted
to be filed on or before the Closing Date.
6.6. Severance and Termination Costs. Seller agrees
to directly pay, or to promptly reimburse Buyer and its
subsidiaries for the payment of any Losses (as hereinafter
defined) incurred or sustained by any of them, directly or
indirectly, as a result of or in connection with the termination
by Buyer during the period commencing at the Closing Date and
ending six months after the Closing Date of any employee of
either of the Companies immediately prior to the Closing;
provided, however, that notwithstanding anything contained herein
to the contrary, (a) Seller shall only be obligated to make such
payments or reimbursements for Losses (i) to the extent that such
Losses are incurred or sustained by Buyer pursuant to (A)
provisions in Benefit Plans, agreements and arrangements in
existence prior to the Closing (whether or not written), (B)
requirements of or under applicable law, rules and regulations
and (C) any other ordinary and customary practices and policies
of Seller or either of the Companies as in effect immediately
prior to the Closing, including such practices with respect to
payments made pursuant to Clause (a)(i)(A) or (a)(i)(B) of this
Section 6.6; and (b) in no event shall Seller be obligated to
make such payments or reimbursements for any Losses in excess of
$750,000 in the aggregate (except for any such Losses relating to
the lawful termination during the periods specified above of any
of the five individuals listed in Section 6.6 of the Disclosure
Schedule, as to each of which individuals Seller shall be
obligated to make payments or reimbursements hereunder for any
such Losses in excess of ten weeks aggregate compensation for
such individual). "Losses" shall, include any loss, liability
(including without limitation any liability for Taxes), damage,
deficiency, cost and expense (including without limitation
reasonable expenses of investigation and reasonable attorneys'
fees). Buyer agrees to provide to Seller, on or before the date
which is 30 days after the Closing Date, a list setting forth the
names of any such employees which it intends to terminate within
the six-month period referenced in the preceding sentence,
together with a description of any severance and termination
costs and expenses expected to be incurred by Buyer and its
Subsidiaries in accordance with the preceding sentence.
6.7. Noncompetition.
(a) For a period of two years after the Closing
(the "Noncompete Period"), neither Seller nor any of its
affiliates shall, directly or indirectly, compete (as hereinafter
defined) with Buyer without the prior written consent of Buyer,
except that any financial interest or other relationship or
arrangement with a third party existing on the date hereof shall
not be deemed to "compete" with Buyer as provided herein. For
purposes of this Section 6.7(a), the term "compete" shall mean:
(i) directly or indirectly having a financial interest in any
entity which has as a substantial part of its business the
distribution of consumer software on CD-ROMS to retailers and
end-users, except that Seller's beneficial ownership of not more
than 20% of the securities of any such entity having total
revenues of less than $20 million for the twelve-month period
ending as of the end of the most recent fiscal quarter of each
entity prior to Seller's initial acquisition of such ownership
shall not constitute a violation of this Section 6.7(a); or (ii)
directly or indirectly engaging or participating in, or
conducting as an owner, manager or consultant of, or having a
financial interest in, or aiding or assisting anyone else in the
conduct of, any publisher of encyclopedia products for on-line
(or other electronic) distribution or for production and
distribution on CD-ROMS.
(b) During the Noncompete Period, Seller shall
not: (i) hire, entice or in any other manner persuade or attempt
to persuade any employee of either of the Companies (immediately
prior to the Closing) or Buyer or any of their respective
subsidiaries or affiliates to discontinue his or her relationship
or violate any agreement with either of the Companies
(immediately prior to the Closing) or Buyer or any of their
respective subsidiaries or affiliates as employee, unless (A)
Seller locates or identifies the employee for recruiting and
employment through general recruiting efforts in the ordinary
course of business and consistent with past practice or (B)
contact between Seller and the employee, is initiated by that
employee (without any prior direct or indirect intervention,
prompting or notice by or from Seller, except as permitted in
clause (A) of this Section 6.7(b)(i); or (ii) knowingly induce or
knowingly attempt to induce any independent contractor, dealer,
supplier client or customer of either of the Companies to
discontinue his or her relationship or violate any agreement with
either of the Companies as independent contractor, dealer,
supplier, client or customer, respectively.
(c) In the event the restrictions against
engaging in competitive activity contained in Section 6.7(a)
shall be determined by any court of competent jurisdiction to be
unenforceable by reason of their extending for too great a period
of time or over too great a geographical area or by reason of
their being too extensive in any other respect, they shall be
interpreted to extend only for the maximum period of time for
which they may be enforceable, and over the maximum geographical
area as to which they may be enforceable, and to the maximum
extent in all other respects as to which they may be enforceable,
all as determined by such court in such action.
6.8. CNI Recapitalization. Prior to the Closing,
Seller shall contribute to the capital of CNI each outstanding
share of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock in a transaction constituting a
recapitalization within the meaning of Section 368(a)(1)(E) of
the Code. As a result of the recapitalization transaction, no
shares of Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock will be outstanding at and as of the
Closing.
6.9. Further Assurances. From time to time after the
Closing, Seller will use all reasonable efforts: (a) to obtain
any licenses, permits, waivers, consents, authorizations,
qualifications and orders of Governmental Entities or other
Persons or entities as Buyer shall reasonably request to enable
the Companies to enjoy after the Closing the rights and benefits
presently enjoyed by the Companies in the conduct of the NewMedia
Business; (b) to transfer to the Companies, at the expense of
Seller all rights in respect of the Assets or any leases,
licenses or other contracts, commitments or agreements held by
Seller or any of the Companies' respective affiliates used in or
necessary for the conduct of the NewMedia Business in
substantially the same manner as it is presently conducted
(including without limitation those relating to the Assets) or
otherwise use all reasonable efforts to provide benefits to the
Companies or their respective assignees of such Assets or under
such leases, licenses and other contracts, commitments and
agreements which are at least as favorable as those in effect
immediately prior to the Closing and (c) to provide Buyer with
any additional information reasonably requested by Buyer to
enable Buyer to comply with SEC reporting and other legal
compliance requirements.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
All obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or
waiver prior to or at the Closing of the following conditions:
7.1. No Injunction or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction prohibiting
or preventing consummation of the transactions contemplated by
this Agreement (an "Injunction") shall be in effect.
7.2. Regulatory Approvals. All applicable waiting
periods under the HSR Act with respect to the transactions
contemplated hereby shall have expired or been terminated.
7.3. Standstill Agreement. Seller shall have executed
and delivered the Standstill Agreement.
7.4. Tax Sharing Agreement. Seller, CNI and CLC shall
have executed and delivered the Tax Sharing Agreement.
7.5. Section 1445 Certificate. Seller shall have
delivered to the Buyer the Tax Certificate.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
All obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to the
satisfaction or waiver prior to or at the Closing of the
following conditions:
8.1. No Injunction or Restraints. No Injunction shall
be in effect.
8.2. Regulatory Approvals. All applicable waiting
periods under the HSR Act with respect to the transactions
contemplated hereby shall have expired or been terminated.
8.3. Registration Rights Agreement. Buyer shall have
executed and delivered the Registration Rights Agreement.
8.4. Tax Sharing Agreement. Buyer shall have executed
and delivered the Tax Sharing Agreement.
8.5. Section 6.2(c) Election. Buyer shall have either
(a) executed and delivered to Seller the Buyer's Note or (b) made
the election provided for in clause (ii) of Section 6.2(c).
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1. Termination of Agreement. This Agreement and the
transactions contemplated hereby may be terminated prior to the
Closing, as follows:
(a) by mutual written consent of Buyer and
Seller; or
(b) by Seller or Buyer, if the Closing has not
occurred on or before December 31, 1996 and this Agreement has
not previously been terminated; provided, however, that the right
to terminate the Agreement under this Section 9.1(b) shall not be
available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date.
9.2. Effect of Termination. In the event this
Agreement is terminated pursuant to Section 9.1 hereof, this
Agreement shall become wholly void and of no force or effect,
without any liability or further obligation on the part of the
Seller or the Buyer, except that the provisions and obligations
set forth in Sections 10.2, 10.3, 10.7, 10.8 and 10.12 shall
survive such termination. No termination of this Agreement shall
terminate or otherwise impair the Confidentiality Agreement dated
November 8, 1995 between the Buyer and Tribune New Media Company
(the "Confidentiality Agreement").
ARTICLE X
GENERAL PROVISIONS
10.1. Amendment and Waiver. No amendment of any
provision of this Agreement shall in any event be effective,
unless the same shall be in writing and signed by the parties
hereto. Any failure of any party to comply with any obligation,
agreement or condition hereunder may only be waived in writing by
the other parties, but such waiver shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
No failure by any party to take any action against any breach of
this Agreement or default by the other parties shall constitute a
waiver of such party's right to enforce any provision hereof or
to take any such action.
10.2. Expenses. Except as otherwise expressly
provided for herein, whether or not the transactions contemplated
by this Agreement shall be consummated, each of the parties
hereto agrees to pay all costs and expenses incurred by it in
connection with this Agreement and the transactions contemplated
hereby, including without limitation the fees of its counsel,
consultants and accountants.
10.3. Broker's and Finder's Fees. Except for
investment banking fees payable by Seller to Salomon Brothers Inc
and Buyer to Xxxxxxxxxx Securities in connection with this
Agreement and the transactions contemplated hereby as previously
disclosed, Seller hereby represents and warrants to Buyer with
respect to Seller and the Companies, and Buyer hereby represents
and warrants to Seller with respect to Buyer, that no Person or
entity is entitled to receive from Seller or either of the
Companies, on the one hand, or from Buyer, on the other hand, any
investment banking, brokerage or finder's fee or fees for
financial consulting or advisory services in connection with this
Agreement or the transactions contemplated hereby.
10.4. Notices. All notices, requests and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, if telecopied (only if confirmed),
if sent by FedEx or other overnight courier or delivery service
or if mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following
addresses or facsimile numbers:
(a) If to Buyer, CUBSCO I or CUBSCO II
c/o SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) If to Seller:
c/o Tribune New Media Company
Xxx Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: President
With a copy to:
Tribune Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Vice President and
General Counsel
The address or facsimile number of a party, for the purposes of
this Section 10.4(b), may be changed by giving written notice to
the other party of such change in the manner provided herein for
giving notice. Unless and until such written notice is received,
the addresses and facsimile numbers provided herein shall be
deemed to continue in effect for all purposes hereunder.
10.5. Entire Agreement; Binding Effect. This
Agreement and the documents referred to herein (a) constitute the
entire agreement and supersede all other agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof (provided that the
Confidentiality Agreement shall survive the execution of this
Agreement) and (b) shall not be assigned by either party (by
operation of law or otherwise) without the prior written consent
of the other party, except that Buyer may assign, in its sole
discretion, any of its rights, interests and obligations
hereunder to any wholly owned subsidiary of Buyer; provided,
however, that no such assignment shall relieve Buyer of its
obligations hereunder.
10.6. Survival. No representation or warranty
contained in this Agreement shall survive the Closing; provided,
however, that the representations and warranties set forth in
Sections 4.2, 4.4, 5.2 and 5.4 shall survive the Closing for two
years, but thereafter shall be of no further force or effect.
This Section 10.6 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the
Closing.
10.7. Remedies. The remedies available to any party
for any breach of this Agreement by any other party shall be
cumulative and shall not preclude the assertion by any such party
of any other rights or the seeking of any other legal, equitable
or statutory remedies against any other party.
10.8. Applicable Law. This Agreement shall be
governed by and be construed in accordance with the laws of the
State of Delaware, without giving effect to the principles
thereof relating to conflicts of laws, except that the CNI Merger
shall be governed by the CGCL.
10.9. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto
and, subject to Section 10.5(b) hereof, their respective
successors and assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights
or remedies of any nature whatsoever under or by reason of this
Agreement.
10.10. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which together
shall constitute one and the same instrument.
10.11. Headings; Pronouns and Conjunctions. The
section and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Unless otherwise
indicated herein or the context otherwise requires, the masculine
pronoun shall include the feminine and neuter, the singular shall
include the plural and the plural shall include the singular.
The word "or" shall not be deemed exclusive.
10.12. Announcements. Except as required by law or
the rules of any national securities exchange, for so long as
this Agreement is in effect (or as provided in Section 9.2
hereof), no announcement of this Agreement or the transactions
contemplated hereby shall be made by any of the parties without
the written consent of the other party or parties, which consent
shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement under seal as of the date first written above.
SOFTKEY INTERNATIONAL INC.
By:/s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
CUBSCO I INC.
By:/s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
CUBSCO II INC.
By:/s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
TRIBUNE COMPANY
By:/s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Senior Vice President
XXXXXXX'X NEWMEDIA, INC.
By:/s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: Secretary
XXXXXXX'X LEARNING COMPANY
By:/s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: Secretary
____________________________________________________________________________
Exhibit A
AGREEMENT OF MERGER
This Agreement of Merger is made as of [ ], 1995
("Agreement") by and between Xxxxxxx'x NewMedia, Inc., a
California corporation ("CNI"), SoftKey International
Inc., a Delaware corporation ("Parent"), and Cubsco I
Inc. ("Cubsco I"), a California corporation and a wholly
owned subsidiary of Parent.
CNI is hereinafter called "Surviving Corporation."
Cubsco I is hereinafter called "Merging Corporation."
Surviving Corporation and Merging Corporation together
are herein sometimes called the "Constituent
Corporations."
Parent is organized in Delaware. Its authorized
capital stock consists of 60,000,000 shares of common
stock, par value $.01 per share (the "Parent common
stock"). As of the date hereof, approximately [ ]
shares have been issued and are outstanding. Parent
shall be authorized, at the time of the merger provided
for herein, to issue the number of shares of Parent
common stock issuable to the sole stockholder of CNI
under the Merger Agreement (as hereinafter defined).
Parent, as the sole holder of all issued and outstanding
shares of capital stock of Merging Corporation is
entitled to cast one vote per share on the adoption and
approval of this Agreement and on all other matters
submitted to it as the sole stockholder of Merging
Corporation.
Surviving Corporation is organized in California.
Its authorized capital stock consists of 10,000,000
shares of common stock (the "Surviving common stock").
As of the date hereof, 1,173,000 shares have been issued
and are outstanding.
Merging Corporation is organized in California. Its
authorized capital stock consists of 1000 shares of
capital stock, par value $.01 per share (the "Merging
common stock"). As of the date hereof, 1,000 shares have
been issued and are outstanding.
This Agreement is being entered into pursuant to an
Agreement and Plan of Merger, dated November 30, 1995,
(the "Merger Agreement") by and between SoftKey
International Inc., a Delaware corporation, Cubsco I
Inc., a California corporation, Cubsco II Inc., a
Delaware corporation, Tribune Company, a Delaware
corporation, Xxxxxxx'x NewMedia, Inc., a California
corporation, and Xxxxxxx'x Learning Company, a Delaware
corporation.
The Boards of Directors of each of Surviving
Corporation, Merging Corporation and Parent (a) have
determined that the merger of Merging Corporation with
and into Surviving Corporation (the "Merger") is in the
best interests of each such corporation, respectively,
and the respective sole stockholders of Merging
Corporation and Surviving Corporation and (b) have
approved the Merger as provided herein.
In consideration of the foregoing and the
mutual covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereby
agree as follows:
1. Merger. Merging Corporation shall be merged with
and into Surviving Corporation and Surviving Corporation
shall survive the Merger.
2. Effective Date. Pursuant to Section 110(c) of
the California General Corporation Law (the "CGCL"), this
instrument and the Merger contemplated herein shall
become effective when a copy of this Agreement, with the
required officers' certificates attached, is filed in
accordance with Section 1103 of the CGCL. The date and
time upon which the Merger becomes effective in
accordance with the foregoing sentence is sometimes
referred to herein as the "Effective Date." The Merger
shall have the effects set forth in the CGCL.
3. Articles of Incorporation and Bylaws. The
articles of incorporation of Surviving Corporation, as
amended and in effect on the Effective Date, shall
continue to be the articles of incorporation of Surviving
Corporation without change or amendment until further
amended in accordance with the provisions thereof and
applicable law. The Bylaws of Surviving Corporation, as
amended and in effect on the Effective Date, shall
continue to be the Bylaws of Surviving Corporation
without change or amendment until further amended in
accordance with the provisions thereof and applicable
law.
4. Directors and Officers. The directors and
officers of Surviving Corporation shall consist of the
directors and officers of Merging Corporation immediately
prior to the Effective Date, each to hold office in
accordance with the CGCL and the articles of
incorporation and Bylaws of Surviving Corporation, until
their respective successors are duly elected and
qualified.
5. Succession. On the Effective Date, Surviving
Corporation shall succeed to Merging Corporation in the
manner of and as more fully set forth in Section 1107 of
the CGCL.
6. Further Assurances. At any time after the
Effective Date, the last acting officers of Merging
Corporation or the corresponding officers of Surviving
Corporation may, in the name of such corporations,
execute and deliver all such proper deeds, assignments
and other instruments and take or cause to be taken all
such further or other actions as Surviving Corporation
may deem necessary or desirable in order to vest, perfect
or confirm in Surviving Corporation title to and
possession of all of Merging Corporation's property,
rights, privileges, powers, franchises, immunities and
interests and otherwise to carry out the purposes of this
Agreement.
7. Capital Stock of Merging Corporation. Upon the
Effective Date, by virtue of the Merger and without any
action on the part of the holder thereof, each share of
the capital stock of Merging Corporation outstanding
immediately prior thereto shall be changed into and
become one fully paid and nonassessable share of the
capital stock of Surviving Corporation.
8. Capital Stock of Surviving Corporation. Upon the
Effective Date, by virtue of the Merger and without any
action on the part of the holder thereof, the then
outstanding shares of Surviving Corporation will be
converted into the right to receive the aggregate number
of shares of Parent common stock.
9. Stock Certificates. On and after the Effective
Date, all of the outstanding certificates which prior to
that time represented shares of the capital stock of
Merging Corporation shall be deemed for all purposes to
evidence ownership of and to represent the shares of
Surviving Corporation into which the shares of Merging
Corporation represented by such certificates have been
changed as herein provided. The registered owner on the
books of Merging Corporation of such outstanding stock
certificate shall, until such certificate shall have been
surrendered for transfer or exchange or otherwise
accounted for to Surviving Corporation, have and be
entitled to exercise any voting and other rights with
respect to, and to receive any dividend and other
distributions upon the shares of, Surviving Corporation
evidenced by such outstanding certificates as above
provided.
11. Abandonment. This Agreement may be abandoned at
any time before the Effective Date by the mutual consent
of the parties hereto.
12. Counterparts. In order to facilitate the filing
of this Agreement, it may be executed in any number of
counterparts, each of which shall be deemed to be an
original.
13. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State
of California, without regard to principles of conflicts
of laws thereof.
Each of the parties has caused this Agreement
to be executed on its behalf by their respective officers
thereunto duly authorized, all as of the date first above
written.
XXXXXXX'X NEWMEDIA, INC.
By:______________________
Name:
Title:
CUBSCO I INC.
By:______________________
Name: Xxxx X. Xxxxxx
Title: Vice President and
Secretary
SOFTKEY INTERNATIONAL INC.
By:______________________
Name: Xxxx X. Xxxxxx
Title: Vice President and
Secretary
____________________________________________________________________________
Exhibit B
CERTIFICATE OF MERGER
OF
CUBSCO II INC.
INTO
XXXXXXX'X LEARNING COMPANY
Pursuant to Section 251(c) of the General
Corporation Law of the State of Delaware
Xxxxxxx'x Learning Company, a Delaware
corporation, does hereby certify to the following facts
relating to the merger of Cubsco II Inc. into Xxxxxxx'x
Learning Company (the "Merger"):
FIRST: The names and states of incorporation
of the constituent corporations to the Merger are as
follows:
Name State
Xxxxxxx'x Learning Company Delaware
Cubsco II Inc. Delaware
SECOND: An Agreement and Plan of
Merger dated November 30, 1995 has been approved,
adopted, certified, executed and acknowledged by each of
the constituent corporations in accordance with Section
251 of the General Corporation Law of the State of
Delaware.
THIRD: The name of the corporation surviving
the Merger is Xxxxxxx'x Learning Company (the "Surviving
Corporation").
FOURTH: The text of the Certificate of
Incorporation of the Surviving Corporation is set forth
as Exhibit A to this Certificate of Merger.
FIFTH: An executed copy of the Agreement and
Plan of Merger is on file at the principal place of
business of the Surviving Corporation, Xxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000.
A copy of the Agreement and Plan of Merger will
be furnished upon request and without cost to any
stockholder of either constituent corporation.
IN WITNESS WHEREOF, Xxxxxxx'x Learning Company
has caused this Certificate of Merger to be executed in
its corporate name this ____ day of ___________, 1995.
XXXXXXX'X LEARNING COMPANY
By:
Name:
Title:
____________________________________________________________________________
Exhibit C
SECURITIES RESALE REGISTRATION RIGHTS AGREEMENT
DATED AS OF NOVEMBER 30, 1995
BY AND AMONG
TRIBUNE COMPANY
AND
SOFTKEY INTERNATIONAL INC.
SECURITIES RESALE REGISTRATION RIGHTS AGREEMENT
This SECURITIES RESALE REGISTRATION RIGHTS AGREEMENT
(this "Agreement") is made and entered into as of November 30,
1995 by and among SOFTKEY INTERNATIONAL INC., a Delaware
corporation (the "Company"), and TRIBUNE COMPANY, a Delaware
corporation (the "Purchaser"), which Purchaser (i) has agreed to
purchase from the Company $150,000,000 principal amount of 51/2%
Senior Convertible/ Exchangeable Notes due 2000 (the "Notes")
pursuant to the Purchase Agreement (as defined below) and (ii)
will acquire shares of Common Stock (as defined below) pursuant
to the Merger Agreement (as defined below).
This Agreement is made pursuant to (i) the Securities
Purchase Agreement dated as of November 30, 1995 (the "Purchase
Agreement") by and among the Company and the Purchaser and (ii)
the Agreement and Plan of Merger dated as of November 30, 1995
providing for two separate reverse subsidiary mergers of wholly
owned subsidiaries of the Company with and into wholly owned
subsidiaries of the Purchaser (the "Merger Agreement"). In order
to induce the Purchaser to purchase the Notes, the Company has
agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is
provided for in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized
terms shall have the following meanings:
Act: Securities Act of 1933, as amended.
Agreement: As defined in the preamble hereto.
Broker-Dealer: Any broker or dealer registered under
the Exchange Act (as hereinafter defined).
Certificate of Designation: The Certificate of
Designation for the Preferred Shares.
Closing Date: The earliest to occur of (a) the closing
of the transactions contemplated by the Merger Agreement and (b)
the purchase and sale of the Notes to the Purchaser.
Commission: Securities and Exchange Commission.
Common Stock: Common Stock of the Company, par value
$.01 per share.
Company: As defined in the preamble hereto.
Effectiveness Target Date: As defined in Section 3
hereof.
Exchange Act: Securities Exchange Act of 1934, as
amended.
Exempt Resales: Any transaction exempt from the
registration requirements of the Act in which the Purchaser sells
the Notes, including without limitation sales (i) to "qualified
institutional buyers," as such term is defined in Rule 144A under
the Act ("QIBs"), (ii) to institutional "accredited investors,"
as such term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Act ("Accredited Institutions") and (iii)
outside the United States, to certain persons in offshore
transactions in reliance on Regulation S under the Act.
Holder: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 6(a) hereof.
Indenture: The Indenture by and among the Company and
State Street Bank and Trust Company, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture
as amended, modified or supplemented from time to time in
accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and
the Notes.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation,
trust, unincorporated organization or a government, agency or
political subdivision thereof.
Preferred Shares: The Company's 51/2% Series C
Convertible Preferred Stock into which the Notes are exchangeable
at the option of the Holders thereof.
Prospectus: The prospectus included in the
Registration Statement, as amended or supplemented including
without limitation by any post-effective amendments thereto, and
all material incorporated by reference into such prospectus.
Purchase Agreement: As defined in the preamble hereto.
Purchaser: As defined in the preamble hereto.
Registrable Securities: As defined in Section 3(a)(i)
hereto.
Registration Statement: The continuous registration
statement of the Company which is filed pursuant to Rule 415
under the Act, including the Prospectus included therein, all
amendments and supplements thereto (including any post-effective
amendments) and all exhibits and material incorporated by
reference therein.
Shelf Filing Deadline: As defined to Section 3 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb), as amended and in effect on the date of
the Indenture.
Transfer Restricted Securities: Each Note, each
Preferred Share and each share of Common Stock (i) issuable upon
conversion of the Notes or Preferred Shares and (ii) issuable to
Purchaser under the Merger Agreement held by the Purchaser or,
except in the case of shares of Common Stock issuable to
Purchaser under the Merger Agreement, its transferee until the
date on which such Note, Preferred Share or share of Common
Stock, as the case may be, has been registered under the Act and
disposed of in accordance with an effective Registration
Statement.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities: The securities
entitled to the benefits of this Agreement are the Transfer
Restricted Securities and, more particularly, the Registrable
Securities.
(b) Holders of Transfer Restricted Securities. A
Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted
Securities of record.
SECTION 3. REGISTRATION
(a) Shelf Registration. The Company hereby agrees to:
(i) use its best efforts to file or cause to be filed
the Registration Statement on or prior to the 90th day after
the Closing Date (the "Shelf Filing Deadline"), which
Registration Statement shall provide for resales of all
Transfer Restricted Securities except (A) Transfer
Restricted Securities held by transferees of any Holder who
or which becomes a Holder after the Registration Statement
is declared effective and (B) Transfer Restricted Securities
held by the transferee of any Holder who or which holds less
than $5,000,000 in principal amount of the Notes or the
equivalent (on an "as exchanged" or "as converted" basis) in
Preferred Shares or shares of Common Stock (such Transfer
Restricted Securities being hereinafter referred to as the
"Registrable Securities"), provided that the Holders thereof
shall have provided the information required pursuant to
Section 3(b) hereof; and
(ii) use all reasonable efforts to cause the
Registration Statement to be declared effective by the
Commission as promptly as practicable after the Closing Date
(the "Effectiveness Target Date").
Subject to any notice by the Company in accordance with Section
4(b) hereof of the existence of any fact or event of the kind
described in Section 4(b)(iii)(D) hereof, the Company shall use
all reasonable efforts to keep the Registration Statement
continuously effective, supplemented and amended as required by
the provisions of Sections 4(a) and (b) hereof to the extent
necessary to ensure that it is available for resales of Transfer
Restricted Securities by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 3(a) and to
ensure that the Registration Statement conforms to the
requirements of this Agreement, the Act and the policies, rules
and regulations of the Commission as announced from time to time
thereunder for a period of at least three years following the
Closing Date.
(b) Certificated Securities; Provision by Holders of
Certain Information in Connection with the Registration
Statement. No Holder of Registrable Securities may include any
of its Transfer Restricted Securities in the Registration
Statement pursuant to this Agreement unless (i) such Holder holds
such Transfer Restricted Securities in the form of physical
certificates and (ii) until such Holder furnishes to the Company
in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request
for use in connection with the Registration Statement or any
Prospectus or preliminary Prospectus included therein. In
connection with all such requests for information from Holders of
Registrable Securities, the Company shall notify such Holders of
the requirements set forth in the preceding sentence. Each
Holder as to which the Registration Statement is being effected
agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially
misleading.
SECTION 4. REGISTRATION PROCEDURES
(a) In connection with the Registration Statement, the
Company shall comply with all the provisions of Section 4(b)
below and shall use all reasonable efforts to effect such
registration to permit the resale of the Registrable Securities
being sold in accordance with the intended method or methods of
distribution thereof.
(b) In connection with the Registration Statement and
any Prospectus required by this Agreement, the Company shall:
(i) subject to Section 4(b)(xv) hereof, use all
reasonable efforts to keep the Registration Statement
continuously effective and provide all requisite financial
statements for the period specified in Section 3 of this
Agreement; upon the occurrence of any event that would cause
the Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission
or (B) not to be effective and usable for resales of
Registrable Securities during the period required by this
Agreement, the Company shall file promptly an appropriate
amendment to the Registration Statement correcting any such
misstatement or omission, and, in the case of either clause
(A) or (B), except as set forth in Section 4(b)(xv) below,
use all reasonable efforts to cause such amendment to be
declared effective and the Registration Statement and the
related Prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration
Statement effective for the applicable period set forth in
Section 3 hereof, or such shorter period as will terminate
when all Registrable Securities covered by the Registration
Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as
so supplemented, cause the Prospectus to be filed pursuant
to Rule 424 under the Act and to comply fully with the
applicable provisions of Rules 424 and 430A under the Act in
a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by
the Registration Statement during the applicable period in
accordance with the intended method or methods of
distribution by the sellers thereof set forth in the
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to
confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment to the
Registration Statement has been filed, and, with respect to
the Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the
qualification of the Registrable Securities for offering or
sale in any jurisdiction or of the initiation of any
proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event
(including without limitation pending negotiations relating
to, or the consummation of, a transaction or the occurrence
of any which would require additional disclosure of
material, nonpublic information by the Company in the
Registration Statement as to which the Company has a bona
fide business purpose for preserving confidentiality or
which renders the Company unable to comply with Commission
requirements) that makes untrue any statement of a material
fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated
by reference therein, or that requires the making of any
additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the
Registrable Securities under state securities or Blue Sky
laws, the Company shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to each of the selling Holders, upon
request, and to each of the underwriter(s), if any, before
filing with the Commission, copies of the Registration
Statement or any Prospectus included therein and any
amendments or supplements thereto (including all documents
incorporated by reference prior to the effectiveness of the
Registration Statement), which documents, other than
documents incorporated by reference, will be subject to the
review of such Holders and underwriter(s), if any, for a
period of at least five business days, and the Company shall
not file the Registration Statement or Prospectus or any
amendment or supplement to the Registration Statement or
Prospectus to which a selling Holder of Registrable
Securities covered by the Registration Statement or the
underwriter(s), if any, shall reasonably object within five
business days after the receipt thereof; a selling Holder or
underwriter(s), if any, shall be deemed to have reasonably
objected to such filing only if the Registration Statement,
amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains a material misstatement or
omission;
(v) if practicable, promptly prior to the filing of
any document that is to be incorporated by reference into
the Registration Statement or Prospectus subsequent to the
effectiveness thereof, and in any event no later than the
date such document is filed with the Commission, provide
copies of such document to the selling Holders, if
requested, and to the underwriter(s), if any, make
representatives of the Company available for discussion of
such document and other customary due diligence matters, and
include such information in such document prior to the
filing thereof as such selling Holders or underwriter(s), if
any, reasonably may request;
(vi) make available at reasonable times for inspection
by the selling Holders, any underwriter(s) participating in
any disposition pursuant to the Registration Statement and
any attorney or accountant retained by such selling Holders
or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the
Company and cause the officers, directors and employees of
the Company to supply all information reasonably requested
by any such Holder, underwriters, attorney or accountant in
connection with the Registration Statement subsequent to the
filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriters, if any, promptly incorporate in the
Registration Statement or any Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriters, if
any, may reasonably request to have included therein,
including, without limitation, information relating to the
"Plan of Distribution" of the Registrable Securities,
information with respect to the principal amount or number
of shares of Registrable Securities being sold to such
underwriter(s), the purchase price being paid therefor and
any other terms of the offering of the Registrable
Securities to be sold in such offering and make all required
filings of any such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is
notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(viii) cause the Notes or Preferred Shares covered by
the Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Notes, in the case
of the Notes, or a majority of the Preferred Shares, in the
case of the Preferred Shares, or the underwriter(s) for any
Underwritten Offering of such Notes or Preferred Shares, if
any;
(ix) [Intentionally omitted]
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of
each Prospectus (including each preliminary prospectus
intended for public distribution) and any amendment or
supplement thereto as such Persons reasonably may request;
the Company hereby consents to the use of each Prospectus
and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer
Restricted Securities covered by any Prospectus or any
amendment or supplement thereto;
(xi) enter into such customary agreements (including
an underwriting agreement), and make such customary
representations and warranties, and, subject to Section
4(b)(xv) hereof, take all such other customary actions in
connection therewith in order to expedite or facilitate the
disposition of the Registrable Securities pursuant to the
Registration Statement contemplated by this Agreement, all
to such extent as may be requested by the Purchaser or by
any Holder of Registrable Securities or underwriter in
connection with any sale or resale pursuant to the
Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten
Registration, the Company shall:
(A) furnish to the Purchaser, each selling Holder
and each underwriter, if any (including any Broker-
Dealer who may be deemed to be an underwriter),
officers' certificates, legal opinions and comfort
letters, in such substance and scope as they may
request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon
the date of the effectiveness of the Registration
Statement;
(B) set forth in full or incorporate by reference
in the underwriting agreement, if any, indemnification
provisions and procedures substantially in the form of
those set forth in Section 6 hereof with respect to all
parties required to be indemnified pursuant to said
Section 6; and
(C) deliver such other documents and certificates
as may be reasonably requested by such parties to
evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting
agreement or other agreement entered into by the
Company pursuant to this clause (xi), if any.
(xii) prior to any public offering of Registrable
Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the
Registrable Securities under the securities or Blue Sky laws
of such jurisdictions as the selling Holders or
underwriter(s) may request; and do any and all other acts or
things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided, however, that the
Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to
take any action that would subject it to service of process
in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as
the Holders or the underwriter(s), if any, may request at
least two business days prior to any sale of Registrable
Securities made by such underwriter(s);
(xiv) use all reasonable efforts to cause the Transfer
Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Registrable Securities,
subject to the proviso contained in clause (xii) above;
(xv) as soon as reasonably practicable after the
occurrence of any fact or event of the kind described in
clause (b)(iii)(D) above, prepare a supplement or post-
effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact necessary, in light of the circumstances in which it
was made, to make the statements therein not misleading,
provided, however, that notwithstanding anything to the
contrary herein, the Company shall not be required to
prepare and file such a supplement or post-effective
amendment or document if the fact no longer exists; and
provided further however, that, in the event of a material
business transaction (including without limitation pending
negotiations relating to such transaction) which based upon
the advice of outside counsel reasonably acceptable to the
Purchaser, would require disclosure by the Company in the
Registration Statement of material, nonpublic information
which the Company has a bona fide business purpose for not
disclosing, then for so long as such circumstances and such
business purpose continue to exist (provided that such
period may not exceed 120 days in any calendar year), the
Company shall not be required to prepare and file a
supplement or post-effective amendment hereunder;
(xvi) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of
the Registration Statement and provide the Trustee under the
Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for
deposit with The Depositary Trust Company;
(xvii) cooperate in any filings required to be made
with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified
independent underwriter") that is required to be retained in
accordance with the rules and regulations of the NASD, and
use all reasonable efforts to cause the Registration
Statement to become effective and be approved by such
governmental agencies or authorities as may be necessary to
enable the Holders selling Registrable Securities to
consummate the disposition of such Transfer Restricted
Securities;
(xviii) otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the Commission,
and make generally available to its security holders, as
soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the
end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm commitment or
best efforts Underwritten Offering or (B) if not sold to
underwriters in such an offering, beginning with the first
month of the Company's first fiscal quarter, as applicable,
commencing after the effective date of the Registration
Statement;
(xix) cause the Indenture to be qualified under the
TIA not later than the effective date of the Registration
Statement, and, in connection therewith: cooperate with the
Trustee and the Holders of Notes to effect such changes to
the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and
execute and use all reasonable efforts to cause the Trustee
to execute, all documents that may be required to effect
such changes and all other forms and documents required to
be filed with the Commission to enable such Indenture to be
so qualified in a timely manner;
(xx) cause all Registrable Securities covered by the
Registration Statement to be listed on any securities
exchange on which similar securities issued by the Company
are then listed if requested by the Holders of a majority in
aggregate principal amount of Notes, the Holders of a
majority of shares of the Preferred Shares, or the managing
underwriter(s), if any; and
(xxi) provide promptly to each Holder upon request any
document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange
Act.
Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the
Company of the existence of any fact or event of the kind
described in Section 4(b)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities
pursuant to the applicable Registration Statement until such
Holder's receipt of the copies of a supplemented or amended
Prospectus as contemplated by Section 4(b)(xv) hereof, or until
it is advised in writing (the "Advice) by the Company that the
use of the Prospectus may be resumed, and, has received copies of
any additional or supplemental filings that are incorporated by
reference in the Prospectus. If so directed by the Company, each
Holder will deliver to the Company (at the expense of the
Company) all copies, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such
Registrable Securities that was current at the time of receipt of
such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of the
Registration Statement set forth in Section 3 hereof shall be
extended by the number of days during the period from and
including the date of the giving of such notice pursuant to
Section 4(b)(iii)(D) hereof to and including the date when each
selling Holder covered by the Registration Statement shall have
received the copies of the supplemented or amended prospectus
contemplated by Section 4(b)(xv) hereof or shall have received
the Advice.
Each Holder, by acquisition of a Transfer Restricted
Security, agrees that, to the extent that (A) such Holder is
deemed to be an "affiliate" of the Company for purposes of the
Securities Act or Accounting Series 130 and 135 of the Commission
and (B) (i) the Company has entered into a business combination
transaction intended to be accounted for as a pooling of
interests and (ii) such accounting treatment requires affiliates
of the Company to not dispose of or otherwise reduce such
affiliate's risk with respect to any Common Stock of the Company
during the period beginning 30 days prior to the effective date
of the transaction and until after such time as results covering
at least 30 days of combined operations of the combined entity
have been published, such Holder shall deliver to the Company an
"affiliate letter" in reasonable and customary form and
reasonably satisfactory to the Company.
SECTION 5. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of
or compliance with this Agreement will be borne by the Company
regardless of whether the Registration Statement becomes
effective, including without limitation: (i) all registration
and filing fees and expenses (including, if applicable, the fees
and expenses of any "qualified independent underwriter" and its
counsel that may be required by the rules and regulations of the
NASD); (ii) all fees and expenses associated with compliance with
federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing of any certificates
evidencing the Notes and Preferred Shares and printing of
Prospectuses), messenger and delivery services and telephone
charges; (iv) all fees and disbursements of counsel for the
Company and, as provided for in Section 5(b) below, the Holders
of Registrable Securities; (v) all application and filing fees in
connection with listing any securities on a national securities
exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its own internal
expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees
and expenses of any Person, including special experts, retained
by the Company.
(b) In connection with the Registration Statement
required by this Agreement, the Company agrees to reimburse the
Purchaser and the Holders of Transfer Restricted Securities
being registered pursuant to the Registration Statement for the
reasonable fees and disbursements of not more than one counsel,
who shall be Sidley & Austin or such other counsel as may be
chosen by the Holders of a majority in principal amount or a
majority of the shares of the Registrable Securities for whose
benefit the Registration Statement is being prepared.
SECTION 6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless
(i)each Holder and (ii) each person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an "Indemnified Holder"),
to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities, judgments, costs and
expenses ("Losses") (including, without limitation and as
incurred, reimbursement of all costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel
to any Indemnified Holder) directly or indirectly caused by,
related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any Prospectus (or any
amendment or supplement thereto) or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except insofar as such Losses are caused by an untrue statement
or omission or alleged untrue statement or omission that is made
in reliance upon and in conformity with information relating to
any of the Holders furnished in writing to the Company by any of
the Holders for use therein. The Company shall notify the
Holders promptly of the institution, threat or assertion of any
claim, proceeding (including any governmental investigation) or
litigation in connection with the matters addressed by this
Agreement which involves the Company or any Indemnified Holder.
(b) In case any action or proceeding (including, without
limitation, any governmental or regulatory investigation or
proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought
against the Company, such Indemnified Holder (or the Indemnified
Holder controlled by such controlling person) shall promptly
notify the Company in writing (provided that the failure to give
such notice shall not relieve the Company of its obligations
pursuant to this Agreement). Any Indemnified Holder shall have
the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Holder,
provided, however, that the fees and expenses of such counsel
shall be at the expense of the Company if (i) the Company has
failed to assume the defense and employ counsel reasonably
satisfactory to the Holders or (ii) the named parties to any such
action (including impleaded parties) include such Indemnified
Holder and the Company and such Indemnified Holder shall have
reasonably concluded that there may be one or more legal defenses
available to it that are different from or in addition to those
available to the Company; provided further that the Company shall
not in such event be responsible hereunder for the fees and
expenses of more than one firm of separate counsel, which firm
shall be designated by the Holders, in connection with any action
in the same jurisdiction, in addition to any local counsel. The
Company shall not be liable for any settlement of any such action
or proceeding effected with its prior written consent, which
consent shall not be unreasonably withheld or delayed, and the
Company agrees to indemnify and hold harmless any Indemnified
Holder from and against any Loss by reason of any settlement of
any action effected with its written consent. The Company shall
not, without the prior written consent of each Indemnified
Holder, settle or compromise or consent to the entry of a
judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Holder is a party thereto) unless
such settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Holder from all
liability arising out of such action, claim, litigation or
proceeding.
(c) Each Holder of Transfer Restricted Securities
agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, its officers, and any person
controlling (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company, and the respective
officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing
indemnity from the Company to each of the Indemnified Holders,
but only with respect to claims and actions based on information
relating to such Holder furnished in writing by such Holder for
use in the Registration Statement or any Prospectus. In case any
action or proceeding shall be brought against any of the Company
or its directors or officers or any such controlling person in
respect of which indemnity may be sought against a Holder of
Transfer Restricted Securities, such Holder shall have the
rights and duties given the Company, and each of the Company or
its directors or officers of such controlling person shall have
the rights and duties given to each Holder by the proceeding
paragraph. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the
proceeds received by such Holder upon the sale of the securities
registered pursuant to provisions hereof giving rise to such
indemnification obligation.
(d) If the indemnification provided for in this Section
6 is unavailable to a party entitled to indemnification in
respect of any Losses referred to herein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified
party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and the Holders on the other hand from
their sale of Transfer Restricted Securities or (ii) if such
allocation is not permitted by applicable law, the relative fault
of the Company on the one hand and of the indemnified Holder on
the other in connection with the statements or omissions which
resulted in the Losses as well as any relevant equitable
considerations. The relative fault of the Company on the one
hand and of the Indemnified Holder on the other shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission. The indemnity and contribution obligations of each
indemnifying party set forth herein shall be in addition to any
liability or obligation such indemnifying party may otherwise
have to any indemnified party.
The Company and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if Holders were treated as one entity for
such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by
an indemnified party as a result of the Losses referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Xxxxxxx 0, xxxx of
the Holders (and their related Indemnified Holders) shall be
required to contribute, in the aggregate, any amount in excess of
the amount by which the total proceeds received by such Holder
with respect to the Notes exceeds the amount of any damages which
such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 6(d) are several in
proportion to the respective principal amount of Notes held by
each of the Holders hereunder and not joint.
SECTION 7. RULE 144A
The Company hereby agrees with each Holder, for so long
as any Transfer Restricted Securities remain outstanding, to make
available to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and
any prospective purchase of such Transfer Restricted Securities
from such Holder or beneficial owner, any information required to
be supplied to a Holder by Rule 144A(d)(4) under the Act in order
to permit offers and sales of such Transfer Restricted Securities
pursuant to Rule 144A.
SECTION 8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten
Registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and
executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such underwriting
arrangements.
SECTION 9. SELECTION OF UNDERWRITERS
The Holders of Registrable Securities covered by the
Registration Statement who desire to do so may sell such
Registrable Securities in an Underwritten Offering. In any such
Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate
principal amount or a majority of the shares of the Registrable
Securities included in such offering; provided that such
investment bankers and managers must be reasonably satisfactory
to the Company.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not,
on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the
Holders hereunder are not inconsistent with the rights granted to
the holders of the Company's securities under any agreement in
effect on the date hereof.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof
may not be given, unless the Company has obtained the written
consent of Holders of a majority of the outstanding principal
amount or a majority of the shares of Transfer Restricted
Securities.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier or courier guaranteeing
overnight deliver;
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to
the Registrar under the Indenture; and
(ii) if to the Company:
SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the
next business day, if timely delivered to a courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee at the address specified in the
Indenture.
(e) Successors and Assigns. This Agreement shall, to
the extent provided for herein, inure to the benefit of and be
binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted
Securities; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign
of a Holder unless and to the extent such successor or assign
acquired Transfer Restricted Securities from such Holder.
(f) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and the remaining provisions contained herein
shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement, together with
the other Transaction Documents (as defined in the Purchase
Agreement) and the Merger Agreement, is intended by the parties
as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
referred to herein or therein with respect to the registration
rights granted by the Company with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
SOFTKEY INTERNATIONAL INC.
By:_______________________
Name:
Title:
TRIBUNE COMPANY
By:_______________________
Name:
Title:
____________________________________________________________________________
Exhibit D
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT (this "Agreement") dated
as of November 30, 1995 by and between Tribune Company, a
Delaware corporation ("Stockholder"), and SoftKey
International Inc., a Delaware corporation ("Issuer").
On November 30, 1995, Stockholder and Issuer:
(a) executed and delivered a Securities Purchase
Agreement (the "Purchase Agreement") providing for the
issuance and sale by Issuer, and the purchase by
Stockholder, of $150,000,000 principal amount of 5-1/2%
Senior Convertible/Exchangeable Notes due 2000 (the
"Notes"), which may be (i) exchanged for Issuer's 5-1/2%
Series C Convertible Preferred Stock (the "Preferred
Stock") which may be converted into shares of common
stock, par value $.01 per share, of Issuer (the "Common
Stock"), or (ii) converted directly into shares of Common
Stock; and (b) together with certain wholly owned
subsidiaries, executed and delivered an Agreement and
Plan of Merger (the "Merger Agreement") providing for two
separate reverse subsidiary mergers of wholly owned
subsidiaries of Issuer with and into wholly owned
subsidiaries of Stockholder in which Issuer will issue to
Stockholder, and Stockholder will receive from Issuer,
shares of Common Stock.
This Agreement is the Standstill Agreement
referenced in the Merger Agreement and sets forth certain
terms and conditions upon which the Issuer will issue and
deliver to Stockholder, and Stockholder (a) will receive
and accept from Issuer, (b) owns and holds, and (c) will
own and hold, the shares of Common Stock acquired by
Stockholder, or any shares of Common Stock which
Stockholder has the right to acquire, pursuant to the
Purchase Agreement and the Merger Agreement (the
"Shares").
In consideration of the mutual agreements
contained in the Purchase Agreement, the Merger Agreement
and herein, and for other good and valuable
consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties agree as follows:
1. Stockholder's Representations and
Warranties. Stockholder represents and warrants to
Issuer as follows:
(a) Stockholder is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware;
(b) Stockholder (i) has the full power
and authority to execute and deliver this Agreement,
perform its obligations hereunder and consummate the
transactions contemplated hereby and (ii) has taken all
necessary action to authorize the execution, delivery and
performance by Stockholder of this Agreement;
(c) this Agreement has been duly and
validly authorized, executed and delivered by Stockholder
and constitutes the valid and binding obligation of
Stockholder, enforceable in accordance with its terms;
(d) Stockholder (or any direct or
indirect subsidiary of Stockholder and all persons
controlling, controlled by or under common control with
Stockholder ("Affiliates"), as the case may be), is, or
upon issuance to it by Issuer will be, the sole
beneficial holder of all the Shares, and Stockholder and
Affiliates have not granted or permitted to exist any
liens, claims, options, proxies, voting agreements,
charges or encumbrances of whatever nature affecting the
Shares;
(e) the Notes and Shares owned and held
by Stockholder and Affiliates as of the date hereof
constitute all of the securities of Issuer owned by
Stockholder and Affiliates;
(f) Stockholder (or Affiliates, as the
case may be) is not acquiring the Notes and Shares owned
and held by Stockholder and is not acquiring the Shares
which may be acquired after the date hereof with the
intent or objective of obtaining control of the business,
operations or affairs of Issuer; and
(g) except as set forth in the Purchase
Agreement and the Merger Agreement, neither the
Stockholder nor any Affiliate has outstanding any option,
warrant or other right to acquire, directly or
indirectly, any securities of Issuer or any securities
which are convertible into or exchangeable or exercisable
for any securities of the Issuer, nor is the Stockholder
or any Affiliate subject to any agreement (whether
written or in the nature of an informal understanding or
arrangement) which allows or obligates the Stockholder or
any such Affiliate to vote or acquire any securities of
the Issuer.
2. Issuer's Representations and Warranties.
Issuer represents and warrants to Stockholder as follows:
(a) Issuer is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware;
(b) Issuer (i) has the full power and
authority to execute and deliver this Agreement, perform
its obligations hereunder and consummate the transactions
contemplated hereby and (ii) has taken all necessary
action to authorize the execution, delivery and
performance by Issuer of this Agreement; and
(c) this Agreement has been duly and
validly authorized, executed and delivered by Issuer and
constitutes the valid and binding obligation of Issuer,
enforceable in accordance with its terms.
3. Covenants of Stockholder. Stockholder
covenants with Issuer that, without the consent of
Issuer, for a period commencing on the date hereof and
continuing through the fifth anniversary of the date
hereof Stockholder and Affiliates, singly or as part of a
group, directly or indirectly, through one or more
intermediaries or otherwise, will not:
(a) purchase, acquire or own, or offer,
propose or agree to purchase, acquire or own, directly or
indirectly, any securities of Issuer which are entitled
to vote generally in the election of directors (other
than upon occurrence of a contingency) ("Voting
Securities"), any option, warrant or other right to
acquire, directly or indirectly, any Voting Securities or
any securities which are convertible into or exchangeable
or exercisable for Voting Securities, if, immediately
after such purchase or acquisition, Stockholder and
Affiliates would beneficially own, in the aggregate,
Voting Securities representing an amount (the "Threshold
Amount") which exceeds the greater of 20% of Issuer's
outstanding Voting Securities or such percentage of the
Issuer's outstanding Voting Securities which the sum of
the Shares issued in connection with the Merger Agreement
and the Shares issuable upon the conversion of the Notes
issued in connection with the Purchase Agreement (taking
into account any Voting Securities into which such Notes
(or any Preferred Stock for which such Notes are
exchanged) may from time to time be convertible as a
result of application of the anti-dilution provisions
applicable to the Notes or the Preferred Stock) would
constitute on a fully diluted basis on the date of the
later of the closings of the transactions contemplated by
the Merger Agreement and the Purchase Agreement;
provided, however, that notwithstanding anything to the
contrary contained herein, the foregoing restriction
shall not be deemed to be violated or applicable if
Stockholder is not otherwise in breach of this Agreement
and (i) the percentage of the outstanding Voting
Securities beneficially owned, in the aggregate, by
Stockholder and Affiliates is increased as a result of a
recapitalization of Issuer, a repurchase of securities by
Issuer or any other action taken solely by Issuer, (ii) a
benefit plan maintained for employees of Stockholder and
Affiliates acquires up to 1% (in the aggregate) of the
outstanding Common Stock solely for purposes of
investment, or (iii) Issuer breaches its obligation under
Section 4(b) hereof; and provided, further, that so long
as Stockholder is not otherwise in breach of this
Agreement, (i) if a third party (which term for purposes
of this Agreement shall include any group as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended) makes a tender or exchange offer which, if
consummated, would result in such third party owning at
least a majority of the Voting Securities and Issuer's
Board of Directors does not oppose such tender or
exchange offer at the time at which it is required by
applicable securities laws to make a recommendation
regarding such tender or exchange offer to Issuer's
stockholders, then Stockholder may make and consummate a
tender or exchange offer for a number of Voting
Securities equal to or greater than the number of Voting
Securities which such third party seeks to purchase
pursuant to such tender or exchange offer, (ii) if a
third party acquires beneficial ownership of at least 30%
of the outstanding Voting Securities, and Stockholder is
prohibited by the terms of this Agreement from acquiring
more than 30% of the outstanding Voting Securities, then
Stockholder may purchase up to the same number of Voting
Securities as such third party or may make and consummate
a tender or exchange offer for all outstanding Voting
Securities, and (iii) if Issuer's Board of Directors
approves a definitive written agreement with respect to a
business combination or other extraordinary transaction
involving Issuer as a result of which more than 50% of
the assets of Issuer would be transferred or a Change of
Control (as defined below) would occur, then Stockholder
may make and consummate a tender or exchange offer for
all outstanding Voting Securities, and if Stockholder is
permitted to make and consummate a tender or exchange
offer pursuant hereto, none of the restrictions contained
in this Section 3 (with the exception of Section 3(f) and
the application of Section 3(g) to Section 3(f)) shall
apply to Stockholder's activities with regard to any
stockholder vote or proposal in connection therewith or
in connection with any alternative transaction or action
proposed in response thereto; "Change of Control" shall
mean any transaction as a result of which (i) the owners
of a majority of the Voting Securities of Issuer
immediately prior to consummation of the transaction will
not continue to own upon completion of the transaction
(A) a majority of the Voting Securities of Issuer or (B)
a majority of the Voting Securities of any other person
into or for the securities of which the Voting Securities
of Issuer will be converted or exchanged as a result of
the transaction or (ii) as a result of which any third
party is entitled to elect a majority of the members of
the Board of Directors of Issuer;
(b) solicit, or encourage any other
person to solicit, "proxies" or become a "participant" or
otherwise engage in any "solicitation" (as such terms are
defined or used in Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) in
opposition to a recommendation of a majority of the
directors of Issuer with respect to any matter; seek to
advise or influence any person (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to the
voting of any securities of the Issuer; or execute any
written consent in lieu of a meeting of holders of
securities of Issuer or any class thereof; provided,
however, that if Stockholder is entitled to elect
directors of Issuer pursuant to Section 3.3 of the
Certificate of Designation of the Preferred Stock (the
"Certificate of Designation"), nothing in this Section
3(b) shall be construed to prohibit Stockholder from
soliciting proxies for the election of such directors
from the holders of Defaulted Parity Stock (as defined in
the Certificate of Designation);
(c) initiate, propose or otherwise
solicit stockholders for the approval of one or more
stockholder proposals with respect to Issuer, as
described in Rule 14a-8 under the Exchange Act;
(d) acquire control of Issuer or directly
or indirectly participate in or encourage the formation
of any "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) owning or seeking to acquire beneficial
ownership of securities of the Issuer or affect control
of Issuer;
(e) otherwise act, directly or
indirectly, alone or in concert with others, to seek to
control or influence in any manner the management,
business, operations, board of directors, policies or
affairs of Issuer, or propose or seek to effect any form
of business combination transaction with Issuer or any
affiliate thereof or any restructuring, recapitalization
or other similar transaction with respect to Issuer;
(f) deposit any of the Shares into a
voting trust, or subject any of the Shares to any
agreement or arrangement with respect to the voting of
the Shares or any agreement having similar effect to any
of the foregoing in this Section 3(f); or
(g) (i) encourage any person, firm,
corporation, group or other entity to engage in any of
the actions covered by clauses (a) through (e) of this
Section 3 or make any public arrangement (or make other
communication with or to Issuer or otherwise which, in
the opinion of counsel to Issuer, would require public
announcement) with respect to any matter set forth in
clause (a) through (f) of this Section 3;
provided, however, that actions taken by any
representative of Stockholder on the Board of Directors
of Issuer, acting solely in his or her capacity as such a
director, shall not violate this Section 3. Stockholder
further covenants to cause the termination or resignation
of any director being removed from the Board of Directors
of Issuer in accordance with Section 4(b) hereof.
4. Covenants of Issuer. Issuer covenants with
Stockholder that:
(a) prior to (i) the closing of the
transactions contemplated by the Purchase Agreement and
the Merger Agreement, whichever occurs earlier (the
"First Closing"), or, if later, (ii) any other event or
transaction which would result in Stockholder
beneficially owning 15% or more of the outstanding Voting
Securities, the Board of Directors of Issuer shall
approve any and all agreements, events or transactions
for purposes of Section 203 of the Delaware General
Corporation Law ("Section 203") in order that the
restrictions contained in Section 203 shall not be
applicable to Stockholder and Affiliates;
(b) Immediately after the First Closing,
and so long as Stockholder shall not be in breach of any
of its obligations hereunder, the Board of Directors of
Issuer shall take all necessary actions to increase the
size of such Board by one and to fill the vacancy created
thereby with an individual designated in writing by
Stockholder and reasonably acceptable to Issuer, and, if
at any time Issuer's Board of Directors shall consist of
11 or more members and the transactions contemplated by
both the Purchase Agreement and the Merger Agreement
shall have been consummated, then Issuer's Board of
Directors shall take all necessary actions to increase
further the size of the Board by one and to fill the
additional vacancy created thereby with a second
individual designated in writing by Stockholder and
reasonably acceptable to Issuer, and Issuer shall
thereafter take such action as necessary or appropriate
to include such individuals among Issuer's nominees for
director, shall recommend to its stockholders a vote in
favor of such individuals at any annual or special
meeting of stockholders called to vote upon the election
or removal of any directors, and shall cause all shares
of capital stock of Issuer over which Issuer exercises
direct or indirect voting power to be voted in favor of
the election of the individuals designated in writing
hereunder by Stockholder; provided, however, that at such
time as Stockholder has the right to designate two
directors and Stockholder beneficially owns fewer than
5,000,000 but at least the lesser of (i) 2,800,000 shares
of Common Stock (including, for purposes of this
calculation, the number of shares of Common Stock into
which the Notes and Preferred Stock beneficially owned by
Stockholder are then convertible) and (ii) 75% of the sum
of any Shares issued in connection with the Merger
Agreement and the Shares issuable upon the conversion of
any Notes issued in connection with the Purchase
Agreement (taking into account any Voting Securities into
which such Notes (or any Preferred Stock for which such
Notes are exchanged) may from time to time be convertible
as a result of the application of the anti-dilution
provisions applicable to the Notes or the Preferred
Stock) (the lesser of the foregoing clauses (i) and (ii)
being referred to herein as the "Lesser Amount"), then
one of Stockholder's nominees shall be removed from
Issuer's Board of Directors and Issuer's obligations
under this Section 4(b) shall only apply in respect of
the election of one nominee of Stockholder, and at such
time as Stockholder owns fewer shares of Common Stock
than the Lesser Amount, Stockholder's remaining or, as
the case may be, sole nominee shall be removed from
Issuer's Board of Directors and Issuer shall be relieved
of its obligations under this Section 4(b); and
(c) Issuer will not, for so long as this
Agreement is effective, enter into or adopt any plans,
agreements, arrangements or understandings which have the
effect of materially impeding, preventing or prohibiting
Stockholder from beneficially owning, in the aggregate,
the Threshold Amount.
5. Specific Performance. Issuer and
Stockholder each acknowledge and agree that in the event
of any breach of this Agreement, the non-breaching party
would be irreparably harmed and could not be made whole
by monetary damages. It is accordingly agreed that
Issuer and Stockholder, in addition to any other remedy
to which they may be entitled at law or in equity, shall
be entitled to compel specific performance of this
Agreement in any action instituted in the federal courts
located in the State of Delaware, or, in the event said
courts would not have jurisdiction for such action, in
any court of the United States or any state having
subject matter jurisdiction. Issuer and Stockholder each
consent to personal jurisdiction in any such action
brought in the federal courts located in the State of
Delaware and to service of process upon it in the manner
set forth in Section 7(g) hereof and addressed to the
General Counsel of the recipient at the address set forth
in Section 7(g).
6. Expenses. All fees and expenses incurred
by Stockholder will be borne by Stockholder, and all fees
and expenses incurred by Issuer in connection with this
Agreement will be borne by Issuer.
7. Miscellaneous.
(a) This Agreement, together with the
Purchase Agreement, the Merger Agreement and the other
agreements contemplated hereby and thereby, constitute
the entire agreement, and supersede all prior agreements
and understandings, whether oral or written, among the
parties hereto, with respect to the subject matter
hereof. This Agreement may not be amended orally, but
only by an instrument in writing signed by each of the
parties to this Agreement.
(b) This Agreement shall inure to the
benefit of and be binding upon the parties hereto and
their heirs, legal representatives, successors and
assigns.
(c) Section headings contained in this
Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
(d) All representations, warranties and
covenants shall survive the execution and delivery
hereof.
(e) This Agreement may be executed in any
number of counterparts, each of which shall, when
executed, be deemed to be an original and all of which
shall be deemed to be one and the same instrument.
(f) This Agreement shall be governed by
and construed and enforced in accordance with the laws of
the State of Delaware, without reference to the conflict
of laws principles thereof.
(g) All notices and other communications
under this Agreement shall be in writing and delivery
thereof shall be deemed to have been made either (i) if
mailed, when received, or (ii) when transmitted by hand
delivery, telegram, telex, FedEx or other overnight
courier service, telecopier or facsimile transmission (in
either case, if confirmed), to the party entitled to
receive the same at the address or facsimile number set
forth in the Merger Agreement (as the same may be amended
or modified in accordance with the terms thereof).
(h) Any waiver by any party of a breach
of any provision of this Agreement shall not operate as
or be construed to be a waiver of any other breach of
such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or
more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this
Agreement.
(i) This Agreement shall terminate and be
of no further effect if the Purchase Agreement and the
Merger Agreement shall have each been terminated in
accordance with their respective terms.
IN WITNESS WHEREOF, and intending to be legally
bound hereby, each of Stockholder and Issuer has executed
or caused this Agreement to be executed as of the date
first above written.
TRIBUNE COMPANY
By
Name:
Title:
SOFTKEY INTERNATIONAL INC.
By
Name:
Title:
____________________________________________________________________________
Exhibit E
PROMISSORY NOTE
$[ ] Boston, Massachusetts
Dated: [ ](1)
FOR VALUE RECEIVED, PIANO INTERNATIONAL INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the
order of TOWER COMPANY, a Delaware corporation
("Lender"), the principal sum of [ ] million dollars
($[ ]) by deposit to [BANK], account no. [ ], in
lawful money of the United States of America in
immediately available funds, or in such other manner as
is provided for herein or as Lender may designate in
writing, on or before [ ](2) (the "Maturity
Date"), with interest on the unpaid balance of such
principal amount at the rate of 6-1/2% per annum from the
date hereof until such principal amount is paid in full.
Subject to compliance with any applicable provisions of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), Buyer may pay amounts due
under this Note at maturity by delivering to Lender, on
the Maturity Date, the number of shares, rounded up to
the nearest whole share, of common stock, par value $.01
per share, of Borrower ("Common Stock") obtained by
dividing the unpaid principal balance plus accrued
interest thereon to the Maturity Date by the volume-
weighted average of the closing prices for Common Stock
as quoted over the Nasdaq National Market for the ten
full trading days preceding the Maturity Date.
Borrower may prepay this Note in whole or in part without
premium or penalty: (a) at any time in immediately
available funds in an amount equal to the principal
amount of the Note to be prepaid plus accrued interest on
such principal amount to the date on which such
prepayment is made or (b) subject to compliance with any
applicable provisions of the HSR Act, by delivering to
Lender, during the twenty-day period commencing on the
three-month, six-month or nine-month anniversary of the
date of issuance of this Note set forth above, the number
of shares, rounded up to the nearest whole share, of
Common Stock obtained by dividing the principal amount to
be prepaid plus accrued interest thereon to the date on
which the prepayment is made by the volume-weighted
average of the closing prices for Common Stock as quoted
___________________
1 Closing Date under the Merger Agreement.
2 The first anniversary of the Closing Date under the
Merger Agreement.
over the Nasdaq National Market for the ten full trading
days preceding any such date on which such prepayment is
made; provided, however, that Borrower must notify Lender
of any such prepayment at least eleven days prior to the
date on which such prepayment is to be made.
Borrower represents that, upon delivery of certificates
for shares of Common Stock in accordance with the terms
and provisions of this Note, such shares of Common Stock
will be validly issued, fully paid and nonassessable.
Lender represents that any shares of Common Stock which
may be issued and delivered to it hereunder will be
acquired for its own account, for investment for an
indefinite period of time, not as nominee or agent for
any other person, firm or corporation and not for
distribution or resale to others; provided, however, that
Borrower and Lender hereby acknowledge that Lender may
dispose of some or all of the shares of Common Stock so
acquired pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the
"Securities Act"), or in a transaction exempt from
registration under the Securities Act. Lender agrees
that it will not sell or otherwise transfer any shares of
Common Stock so acquired unless such shares are
registered under the Securities Act or unless an
exemption from such registration is available.
Interest shall be computed hereunder based on actual days
elapsed.
In no event shall the amount of interest due or payable
hereunder exceed the maximum rate of interest allowed by
applicable law, and in the event any payment is made
which exceeds such maximum lawful rate, then the amount
of such excess sum shall be credited as a payment of
principal. It is the express intent hereof that the
Borrower shall not pay and the Lender shall not receive,
directly or indirectly, interest in excess of what may
lawfully be paid by Borrower under applicable law.
This Note may not be assigned without the prior written
consent of Lender.
This Note may not be changed, amended or modified except
by agreement in writing signed by Borrower and Lender.
Borrower hereby waives demand for payment, presentment
for payment, protest and notice of any kind whatsoever.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW).
PIANO INTERNATIONAL INC.
By:
Name:
Title:
TOWER COMPANY
By:
Name:
Title:
____________________________________________________________________________
Exhibit F
TAX SHARING AGREEMENT
by and among
SOFTKEY INTERNATIONAL INC.,
TRIBUNE COMPANY,
XXXXXXX'X NEWMEDIA, INC.,
and
XXXXXXX'X LEARNING COMPANY
dated [________]
Table of Contents
Section 1. Certain Defined Terms . . . . . . . . . . . . . . 1
a. "Affiliated Group" . . . . . . . . . . . . . . . . 2
b. "Audit" . . . . . . . . . . . . . . . . . . . . . . 2
c. "CLC Deconsolidation Date" . . . . . . . . . . . . 2
d. "CLC Post-Closing Period" . . . . . . . . . . . . . 2
e. "CLC Pre-Closing Period" . . . . . . . . . . . . . 2
f. "CLC Straddle Period" . . . . . . . . . . . . . . . 2
g. "CNI Deconsolidation Date" . . . . . . . . . . . . 2
h. "CNI Post-Closing Period" . . . . . . . . . . . . . 2
i. "CNI Pre-Closing Period" . . . . . . . . . . . . . 2
j. "CNI Straddle Period" . . . . . . . . . . . . . . . 2
k. "Combined Group" . . . . . . . . . . . . . . . . . 2
l. "Federal Income Taxes" . . . . . . . . . . . . . . 3
m. "Federal Taxes" . . . . . . . . . . . . . . . . . . 3
n. "Federal Income Tax Return" . . . . . . . . . . . . 3
o. "Federal Tax Return" . . . . . . . . . . . . . . . 3
p. "Non-Federal Combined Tax Return" . . . . . . . . . 3
q. "Non-Federal Combined Taxes" . . . . . . . . . . . 3
r. "Non-Federal Separate Tax Return" . . . . . . . . . 4
s. "Non-Federal Separate Taxes" . . . . . . . . . . . 4
t. "Non-Federal Taxes" . . . . . . . . . . . . . . . . 4
u. "Non-Federal Tax Return" . . . . . . . . . . . . . 4
v. "Post-Closing Periods" . . . . . . . . . . . . . . 4
w. "Pre-Closing Periods" . . . . . . . . . . . . . . . 4
x. "Straddle Periods" . . . . . . . . . . . . . . . . 4
y. "Subsidiary Combined Group" . . . . . . . . . . . . 5
z. "Subsidiary Matter" . . . . . . . . . . . . . . . . 5
aa. "Tax Authority" . . . . . . . . . . . . . . . . . . 5
ab. "Tax Returns" . . . . . . . . . . . . . . . . . . . 5
ac. "Taxes" . . . . . . . . . . . . . . . . . . . . . . 5
Section 2. Preparation and Filing of Tax Returns . . . . . . 5
2.1. Federal Income Tax Returns for Pre-Closing
Periods . . . . . . . . . . . . . . . . . . 5
2.2. Non-Federal Combined Tax Returns for Pre-
Closing Periods and Straddle Periods . . . . 5
2.3. Non-Federal Separate Tax Returns for Pre-
Closing Periods and Straddle Periods . . . . 6
2.4. Post-Closing Periods . . . . . . . . . . . . 6
2.5. Federal Tax Returns (Excluding Federal In-
come Tax Returns for Pre-Closing Periods) . 6
2.6. Consistent Preparation of Tax Returns . . . 6
Section 3. Payment of Taxes . . . . . . . . . . . . . . . . 6
3.1. Federal Income Taxes for Pre-Closing Peri-
ods . . . . . . . . . . . . . . . . . . . . 6
3.2. Non-Federal Combined Taxes for Pre-Closing
Periods and Straddle Periods . . . . . . . . 7
3.3. Non-Federal Separate Taxes for Pre-Closing
Periods and Straddle Periods . . . . . . . . 7
3.4. Federal Taxes (Excluding Federal Income
Taxes for Pre-Closing Periods) . . . . . . . 7
Section 4. Redetermination . . . . . . . . . . . . . . . . . 7
Section 5. Indemnification . . . . . . . . . . . . . . . . . 8
5.1. Indemnity . . . . . . . . . . . . . . . . . 8
5.2. Calculation of Indemnity . . . . . . . . . . 8
Section 6. Audits, Disputes, Etc. . . . . . . . . . . . . . 9
6.1. Federal Taxes and Non-Federal Combined Tax-
es for Pre-Closing Periods . . . . . . . . . 9
6.2. Non-Federal Separate Taxes for Pre-Closing
Periods and Straddle Periods . . . . . . . . 10
Section 7. Mutual Cooperation . . . . . . . . . . . . . . . 10
Section 8. Resolution of Certain Conflicts . . . . . . . . . 11
Section 9. Reorganization Status . . . . . . . . . . . . . . 11
Section 10. General Provisions . . . . . . . . . . . . . . . 11
a. Effectiveness . . . . . . . . . . . . . . . . . . . 11
b. Entire Agreement; Binding Effect . . . . . . . . . 12
c. Severability . . . . . . . . . . . . . . . . . . . 12
d. Time of Payment . . . . . . . . . . . . . . . . . . 12
e. Applicable Law . . . . . . . . . . . . . . . . . . 12
f. Notices . . . . . . . . . . . . . . . . . . . . . . 12
g. Amendment and Waiver . . . . . . . . . . . . . . . 13
h. Parties in Interest . . . . . . . . . . . . . . . . 14
i. No Third-Party Beneficiaries . . . . . . . . . . . 14
j. Alternative Minimum Tax . . . . . . . . . . . . . . 14
k. Federal Income Tax Return Closing Date . . . . . . 14
l. Ratable Allocation Election . . . . . . . . . . . . 14
m. Reattribution of Losses . . . . . . . . . . . . . . 15
n. Treatment of Tax Payments and Refunds . . . . . . . 15
o. Counterparts . . . . . . . . . . . . . . . . . . . 15
p. Headings; Pronouns and Conjunctions . . . . . . . . 15
This Tax Sharing Agreement (the "Agreement"), is made
and entered into this [__] day of [_________], by and among
SoftKey International Inc., a Delaware corporation ("Buyer"),
Tribune Company, a Delaware corporation ("Seller"), Xxxxxxx'x
NewMedia, Inc., a California corporation ("CNI"), and Xxxxxxx'x
Learning Company, a Delaware corporation ("CLC" and, together
with CNI, the "Companies").
WHEREAS, Seller is the owner of all of the issued and
outstanding capital stock of CNI and CLC;
WHEREAS, Buyer desires to acquire CNI and CLC upon the
terms and subject to conditions set forth in the Agreement and
Plan of Merger (the "Merger Agreement") made and entered into on
the 30th day of November, 1995, by and among Buyer, Cubsco I
Inc., a California corporation, Cubsco II Inc., a California
corporation, Seller, and the Companies;
WHEREAS, Seller and the Companies are members of an
affiliated group of corporations, as defined in section 1504(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), of
which Seller is the common parent;
WHEREAS, CNI and its subsidiaries, if any, (the "CNI
Group") and CLC and its subsidiaries, if any, (the "CLC Group"
and, together with the CNI Group, the "Subsidiary Groups") will
cease to be members of the Affiliated Group (as defined herein)
upon the close of business on the CNI Deconsolidation Date (as
defined herein) and the CLC Deconsolidation Date (as defined
herein), respectively; and
WHEREAS, it is the intent and desire of the parties
hereto to provide for (i) sharing and allocation of, and indemni-
fications against, certain liabilities for Taxes (as defined
herein), (ii) the preparation and filing of Tax Returns (as
defined herein) and the payment of Taxes, and (iii) certain
related matters.
NOW, THEREFORE, in consideration of the foregoing and
the agreements, mutual covenants and promises hereinafter set
forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
Section 1. Certain Defined Terms. For purposes of this
Agreement, the following terms shall have the following meanings:
a. "Affiliated Group" means the affiliated group of
corporations, as defined in section 1504(a) of the Code, of which
Seller is the common parent, and as the context may require, any
member of such group.
b. "Audit" includes any audit, assessment of Taxes,
other examination by any Tax Authority (as defined herein),
proceeding, or appeal of such proceeding relating to Taxes,
whether administrative or judicial.
c. "CLC Deconsolidation Date" means with respect to
CLC Group, the close of business on the day on which CLC Group
ceases to be a member of the Affiliated Group.
d. "CLC Post-Closing Period" means with respect to the
CLC Group, a taxable period beginning after the CLC
Deconsolidation Date.
e. "CLC Pre-Closing Period" means with respect to the
CLC Group, a taxable period ending on or prior to the CLC
Deconsolidation Date.
f. "CLC Straddle Period" means with respect to CLC
Group, a taxable period beginning on or prior to and ending after
the CLC Deconsolidation Date.
g. "CNI Deconsolidation Date" means with respect to
CNI Group, the close of business on the day on which CNI Group
ceases to be a member of the Affiliated Group.
h. "CNI Post-Closing Period" means with respect to the
CNI Group, a taxable period beginning after the CNI
Deconsolidation Date.
i. "CNI Pre-Closing Period" means with respect to the
CNI Group, a taxable period ending on or prior to the CNI
Deconsolidation Date.
j. "CNI Straddle Period" means with respect to CNI
Group, a taxable period beginning on or prior to and ending after
the CNI Deconsolidation Date.
k. "Combined Group" means a group of corporations that
includes Seller (or any of its subsidiaries) and files a Non-
Federal Combined Tax Return, and as the context may require, any
member of such group.
l. "Federal Income Taxes" includes all Federal income,
alternative minimum, and withholding (excluding taxes withheld
from wages pursuant to Sections 3401-3406 of the Code, or any
successor provisions thereto) taxes imposed under the Code,
including any interest, additions to tax, or penalties applicable
thereto.
m. "Federal Taxes" includes all Federal taxes (includ-
ing Federal Income Taxes), charges, fees, levies, imposts,
duties, or other assessments of a similar nature, including
without limitation, income, alternative or add-on minimum, gross
receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, premium, capital stock, profits, with-
holding, Social Security, unemployment, disability, ad valorem,
estimated, highway use, commercial rent, capital stock, paid up
capital, recording, registration, property, real property gains,
value added, business license, custom duties, or other tax or
governmental fee of any kind whatsoever, imposed or required to
be withheld by a governmental agency of the United States of
America, including any interest, additions to tax, or penalties
applicable thereto.
n. "Federal Income Tax Return" means any return,
declaration, statement, report, schedule, certificate, form,
information return, or any other document (including any related
or supporting information), including an amended Tax Return,
required to be supplied to, or filed with, a Tax Authority with
respect to Federal Income Taxes;
o. "Federal Tax Return" means any return (including
Federal Income Tax Returns), declaration, statement, report,
schedule, certificate, form, information return, or any other
document (including any related or supporting information),
including an amended Tax Return, required to be supplied to, or
filed with, a Tax Authority with respect to Federal Taxes;
p. "Non-Federal Combined Tax Return" means any return,
declaration, statement, report, schedule, certificate, form,
information return, or any other document (including any related
or supporting information), including an amended Tax Return,
required to be supplied to, or filed with, a Tax Authority with
respect to Non-Federal Combined Taxes;
q. "Non-Federal Combined Taxes" means for any Pre-
Closing or Straddle Period any Non-Federal Tax that Seller and
(i) CNI and/or CLC or (ii) any of the subsidiaries of CNI and/or
CLC, have in past practice computed on a unitary or combined
basis with respect to California, Florida and/or Illinois;
r. "Non-Federal Separate Tax Return" means any return,
declaration, statement, report, schedule, certificate, form,
information return, or any other document (including any related
or supporting information), including an amended Tax Return,
required to be supplied to, or filed with, a Tax Authority with
respect to Non-Federal Separate Taxes;
s. "Non-Federal Separate Taxes" means any Non-Federal
Tax that is not a Non-Federal Combined Tax;
t. "Non-Federal Taxes" includes all state, local, and
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments of a similar nature, including without limitation,
income, alternative or add-on minimum, gross receipts, excise,
employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental,
premium, capital stock, profits, withholding, Social Security,
unemployment, disability, ad valorem, estimated, highway use,
commercial rent, capital stock, paid up capital, recording,
registration, property, real property gains, value added, busi-
ness license, custom duties, or other tax or governmental fee of
any kind whatsoever, imposed or required to be withheld by any
Tax Authority (excluding any governmental agency of the United
States of America), including any interest, additions to tax, or
penalties applicable thereto.
u. "Non-Federal Tax Return" means any return, declara-
tion, statement, report, schedule, certificate, form, information
return, or any other document (including any related or support-
ing information), including an amended Tax Return, required to be
supplied to, or filed with, a Tax Authority with respect to Non-
Federal Taxes;
v. "Post-Closing Periods" means all CNI Post-Closing
Periods and CLC Post-Closing Periods.
w. "Pre-Closing Periods" means all CNI Pre-Closing
Periods and CLC Pre-Closing Periods.
x. "Straddle Periods" means all CNI Straddle Periods
and CLC Straddle Periods.
y. "Subsidiary Combined Group" means a group consist-
ing of one or more members of the CNI Group or CLC Group that is
a member of a Combined Group.
z. "Subsidiary Matter" shall have the meaning ascribed
thereto in Section 6.1 of this Agreement.
aa. "Tax Authority" includes the Internal Revenue
Service and any state, local, foreign or other governmental
authority responsible for the administration of any Taxes (domes-
tic or foreign).
ab. "Tax Returns" shall mean Federal Tax Returns and
Non-Federal Tax Returns, as the context requires.
ac. "Taxes" shall mean Federal Taxes and Non-Federal
Taxes, as the context requires.
Section 2. Preparation and Filing of Tax Returns.
2.1. Federal Income Tax Returns for Pre-Closing
Periods. Seller shall prepare, or cause to be prepared, and file
all Federal Income Tax Returns of the Subsidiary Groups for any
Pre-Closing Period. Seller shall provide Buyer, at least 30 days
prior to filing, with a copy of a pro forma Federal Income Tax
Return of each of the Subsidiary Groups for the final Pre-Closing
Period for Buyer's review and approval, which approval shall not
be unreasonably withheld. After receipt of Buyer's approval, but
in no event later than the due date for filing, Seller shall file
the Federal Income Tax Return of the Affiliated Group (including
the Subsidiary Groups) for such Pre-Closing Period.
2.2. Non-Federal Combined Tax Returns for Pre-
Closing Periods and Straddle Periods. Seller shall prepare, or
cause to be prepared, and file all Non-Federal Combined Tax
Returns, with respect to the assets, earnings, and operations of
the Subsidiary Groups, for all Pre-Closing Periods and Straddle
Periods. Seller shall provide Buyer, at least 30 days prior to
filing, with a copy of pro forma Non-Federal Combined Tax Returns
of the Subsidiary Groups for the final Pre-Closing Period or
Straddle Period for Buyer's review and approval, which approval
shall not be unreasonably withheld. After receipt of Buyer's
approval, but in no event later than the due date for filing,
Seller shall file the Non-Federal Combined Tax Returns with
respect to such Pre-Closing Period or Straddle Period with the
appropriate Tax Authority.
2.3. Non-Federal Separate Tax Returns for Pre-
Closing Periods and Straddle Periods. Buyer shall prepare, or
cause to be prepared, for Seller's review and approval, which
approval shall not be unreasonably withheld, all Non-Federal
Separate Tax Returns, with respect to the assets, earnings, and
operations of the Subsidiary Groups, for all Pre-Closing Periods
and Straddle Periods; provided, however, that Seller's review and
approval shall only be necessary with respect to those Non-
Federal Tax Returns for which Seller is obligated to make a
payment under Section 3.3, below. Upon receipt of Seller's
approval (if applicable), but in no event later than the due date
for filing, Buyer shall file all Non-Federal Separate Tax Returns
with the appropriate Tax Authorities and provide Seller with a
copy of such Non-Federal Separate Tax Returns that Buyer files,
or causes to be filed, with respect to a Pre-Closing Period or
Straddle Period.
2.4. Post-Closing Periods. Buyer shall pre-
pare, or cause to be prepared, and file all Tax Returns required
to be filed by, or on behalf of, the Subsidiary Groups for all
Post-Closing Periods.
2.5. Federal Tax Returns (Excluding Federal
Income Tax Returns for Pre-Closing Periods). The parties shall
each prepare, or cause to be prepared, and file all of their
respective Federal Tax Returns (excluding Federal Income Tax
Returns for Pre-Closing Periods, which are governed by Section
2.1 above) required by law to be filed by, or on behalf of, such
parties for all Pre-Closing Periods, Straddle Periods, and Post-
Closing Periods.
2.6. Consistent Preparation of Tax Returns.
The Tax Returns described in this Section 2, with respect to Pre-
Closing Periods and Straddle Periods, shall be prepared on a
basis that is consistent with industry practice and the manner in
which such Tax Returns were filed prior to the date hereof,
unless a contrary treatment is required by law.
Section 3. Payment of Taxes.
3.1. Federal Income Taxes for Pre-Closing
Periods. Seller shall pay to the Internal Revenue Service all
Federal Income Taxes, if any, of the Affiliated Group (including
the Subsidiary Groups) due and payable for all Pre-Closing
Periods.
3.2. Non-Federal Combined Taxes for Pre-Closing
Periods and Straddle Periods. Seller shall pay to the appropri-
ate Tax Authorities all Non-Federal Combined Taxes, if any, with
respect to the assets, earnings, and operations of the Subsidiary
Groups, due and payable for all Pre-Closing Periods and Straddle
Periods.
3.3. Non-Federal Separate Taxes for Pre-Closing
Periods and Straddle Periods. To the extent that a liability for
Non-Federal Separate Taxes arises other than as a result of a
Redetermination (as defined in Section 4, below) and such liabil-
ity for Non-Federal Separate Taxes (when aggregated with all
other such liabilities paid or payable after the CNI
Deconsolidation Date or CLC Deconsolidation Date on a cumulative
basis, excluding such liabilities that arise as a result of a
Redetermination) exceeds $50,000, Seller shall (as directed by
Buyer or the Companies) (i) pay to the appropriate Tax Authori-
ties or (ii) reimburse CNI and/or CLC for all of the Non-Federal
Separate Taxes, if any, with respect to the assets, earnings, and
operations of CNI Group and CLC Group, due and payable for all
Pre-Closing Periods and Straddle Periods.
3.4. Federal Taxes (Excluding Federal Income
Taxes for Pre-Closing Periods). As directed by Buyer or the
Companies, Seller shall (i) pay to the appropriate governmental
agency of the United States of America or (ii) reimburse CNI
and/or CLC for all of their respective Federal Taxes (excluding
Federal Income Taxes for Pre-Closing Periods, which are governed
by Section 3.1 above), if any, due and payable for all Pre-
Closing Periods and that portion of any Straddle Periods up to
and including the CNI Deconsolidation Date and CLC
Deconsolidation Date.
Section 4. Redetermination. In the event of any redetermi-
nation of any item of income, gain, loss, deduction or credit of
any member of the Affiliated Group or a Combined Group for any
Pre-Closing Period or Straddle Period as a result of a final
assessment, settlement, or compromise with any Tax Authority
(including any amended Tax return or claim for refund filed by
Seller pursuant to Section 6.1 or the relevant Subsidiary Group
pursuant to Section 6.2) or a judicial decision that has become
final (a "Redetermination"), Seller and Buyer shall recompute the
Tax due on the relevant Tax Return for such Pre-Closing Period or
Straddle Period (and any other Pre-Closing Periods which are
affected thereby) to take into account such Redetermination. If
a Redetermination results in an increase in the liability for
Taxes of the Affiliated Group or Combined Group for any Pre-
Closing Period or Straddle Period and such increase is attribut-
able to an item of income, gain, loss, deduction or credit of the
CNI Group or CLC Group for a Pre-Closing Period or Straddle
Period of the Affiliated Group during which the CNI Group or CLC
Group was a member of the Affiliated Group or Combined Group, as
directed by CNI and CLC, Seller shall (i) pay to the appropriate
Tax Authorities or (ii) reimburse CNI and/or CLC for the amount
of such increased liability for Taxes.
Section 5. Indemnification.
5.1. Indemnity. Seller shall indemnify, defend
and hold Buyer, CNI, CLC, and their affiliates harmless from and
against any loss, cost, expense (including reasonable attorneys
fees and costs) and any and all liabilities imposed on or in-
curred by Buyer, CNI, CLC, and/or any of their affiliates in
respect of any liability for any Taxes (including any liability
for Federal Taxes imposed pursuant to Treasury Regulation
SECTION 1.1502-6 or similar provision under state, local or foreign
law) for any Pre-Closing Period and that portion of any Straddle
Period up to and including the later of the CNI Deconsolidation
Date and the CLC Deconsolidation Date; provided, however, that
with respect to indemnification for any liability arising out of
Non-Federal Separate Taxes, Seller shall indemnify, defend and
hold Buyer, CNI, CLC, and their affiliates harmless from and
against any loss, cost, expense (including reasonable attorneys
fees and costs) and any and all liabilities imposed on or in-
curred by Buyer, CNI, CLC, and/or any of their affiliates in
respect of any liability for any Non-Federal Separate Taxes for
any Pre-Closing Period and that portion of any Straddle Period up
to and including the later of the CNI Deconsolidation Date and
the CLC Deconsolidation Date, only if (i) such liability for Non-
Federal Separate Taxes arises as a result of a Redetermination or
(ii) such liability for Non-Federal Separate Taxes exceeds (when
aggregated with all other such liabilities paid or payable after
the CNI Deconsolidation Date or CLC Deconsolidation Date on a
cumulative basis, excluding such liabilities that arise as a
result of a Redetermination) $50,000 and arises in any manner
other than as a result of a Redetermination.
5.2. Calculation of Indemnity. In the case of
any liability asserted against a party entitled to be indemnified
(an "Indemnitee") pursuant to Section 5.1. hereof, Seller (the
"Indemnitor"), shall pay to the Indemnitee an amount (the "Indem-
nity Amount") that, after subtraction of all Taxes payable by
such Indemnitee as a result of the receipt or accrual of such
amount, shall be equal to the amount by which the Taxes payable
by such Indemnitee, taking such liability into account, exceed in
the aggregate the Taxes that would have been required to be paid
by such Indemnitee had such liability never occurred.
Section 6. Audits, Disputes, Etc.
6.1. Federal Taxes and Non-Federal Combined
Taxes for Pre-Closing Periods and Straddle Periods. Seller shall
have the exclusive right to control and represent the interests
of all parties hereto in any Audit, to initiate any claim for
refund, to contest, resolve and defend against any assessment,
notice of deficiency, or other adjustment or proposed adjustment
of Federal Taxes or Non-Federal Combined Taxes (including the
right to agree to any assessment, deficiency, or settlement of
any of the foregoing items) relating to any Federal Tax Return or
Non-Federal Combined Tax Return of Seller, CNI, or CLC filed for
any Pre-Closing Period or Straddle Period during which CNI or CLC
was a member of the Affiliated Group or Combined Group, as the
case may be. In the event CNI or CLC wants to contest an item or
matter relating to CNI or CLC which item would adversely affect
the liability of CNI or CLC for Federal Taxes or Non-Federal
Combined Taxes for a Post-Closing Period or portion of a Straddle
Period ending after the CNI Deconsolidation Date or CLC
Deconsolidation Date (a "Subsidiary Matter"), CNI or CLC, as the
case may be, may request Seller's written consent, which consent
shall not be unreasonably withheld, that CNI or CLC be entitled
to contest, resolve and defend against any such Subsidiary
Matter, at CNI's or CLC's expense; provided, however, that
Seller's consent shall not be considered unreasonably withheld
if, among other reasons, Seller determines that (i) CNI or CLC
will assert a position with respect to such Subsidiary Matter
that is contrary to a position that has been asserted by a member
of the Affiliated Group with respect to a similar Federal Tax
matter or Non-Federal Combined Tax matter or (ii) provision of
such consent could result in an unreasonable delay in Seller's
resolution of any Audit that would result in a material cost to
Seller. Seller shall have the exclusive right to file any
amended Federal Tax Return or amended Non-Federal Combined Tax
Return relating to any Federal Tax Return or Non-Federal Combined
Tax Return, as the case may be, filed for any Pre-Closing Period
during which the CNI Group, CLC Group or a Subsidiary Combined
Group was a member of the Affiliated Group or Combined Group, as
the case may be; provided, however, that Seller shall not file
any such amended Federal Tax Return that contains a Subsidiary
Matter without the prior written consent of CNI or CLC, as the
case may be, which consent shall not be unreasonably withheld.
Upon request, Buyer, CNI, CLC, and Seller will execute and
deliver to Seller or Buyer, as the case may be, such powers of
attorney as may be reasonably necessary to authorize Seller,
Buyer, CNI, or CLC to extend statutes of limitations, receive
refunds, and take such other actions that Seller, Buyer, CNI, or
CLC may reasonably consider to be necessary to contest any Audit
pursuant to this Section 6.1.
6.2. Non-Federal Separate Taxes for Pre-Closing
Periods and Straddle Periods. CNI and CLC shall have the exclu-
sive right to control, conduct and to represent the interests of
all parties hereto in any Audit, to initiate any claim for
refund, to file any amended Non-Federal Separate Tax Return, to
contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment of Taxes
(including the right to agree to any assessment, deficiency, or
settlement of any of the foregoing items) relating to any Non-
Federal Separate Tax Return filed with respect to any Pre-Closing
Period or Straddle Period; provided, however, that CNI or CLC, as
the case may be, shall not take any of the foregoing actions with
respect to any Non-Federal Separate Tax matter for which Seller
may have liability under this Agreement without the prior written
consent of Seller, which consent shall not be unreasonably
withheld. Seller and the Affiliated Group will execute and
deliver to CNI or CLC (or a subsidiary or affiliate thereof), as
the case may be, promptly upon request, such powers of attorney
as may be reasonably necessary to authorize CNI or CLC (or a
subsidiary or affiliate thereof), as the case may be, to extend
statutes of limitations and receive refunds that CNI or CLC, as
the case may be, may reasonably consider to be necessary to
contest any Audit pursuant to this Section 6.2.
Section 7. Mutual Cooperation. Seller, Buyer, CNI, and CLC
shall cooperate with each other in the filing of any Tax Return,
amendment thereto, or consent contemplated by this Agreement and
to take such action as such other party may reasonably request,
including (but not limited to):
a. providing data for the preparation of any original
or amended Tax Returns;
b. cooperating in any Audit, including the execution
of limited powers of attorney that do not permit the entry into
of any settlement agreement, unless otherwise mutually agreed to
by the parties;
c. filing protests or otherwise contesting any Audit,
including the filing of petitions for redetermination or prose-
cuting actions for refund in any court and pursuing the appeal of
any such actions;
d. retaining and providing on demand books, records,
documentation or other information relating to any Tax Return
until the expiration of the applicable statute of limitation
(giving effect to any extension, waiver, or mitigation thereof),
providing additional information and explanation of material
provided hereunder, and the use of the parties' commercially
reasonable efforts to obtain any documentation from a governmen-
tal authority or third party that may be necessary or helpful in
connection with the foregoing.
Section 8. Resolution of Certain Conflicts. In the event
that the parties cannot agree on the calculation of the amount of
any liability for Taxes covered by this Agreement and/or the
Indemnity Amount, the parties will engage an independent, certi-
fied public accounting firm of national reputation, reasonably
acceptable to each party, to make such calculation and the
decision of such firm will be conclusive. The cost of such
engagement will be borne solely by the party that does not
prevail in substantial part in the determination of the firm that
is engaged; provided, however, that if such firm determines that
neither party prevailed in substantial part, the cost of such
engagement shall be shared equally by Seller and Subsidiary.
Section 9. Reorganization Status. On or prior to the
second anniversary of the Closing Date (as defined in the Merger
Agreement), (i) Seller shall not dispose of the stock issued to
Seller in the Mergers (as defined in the Merger Agreement) and
(ii) Buyer and the Companies shall not (a) cease to conduct the
business of the Companies, (b) dispose, transfer or distribute a
significant portion of the assets of the Companies, (c) dispose
of the stock of the Companies, or (d) repurchase the stock issued
to Seller in the Mergers, which action such party actually
believes, after consultation with such party's tax counsel,
should, taken alone or together with other actions of such party,
cause either of the Mergers to fail to qualify as a reorganiza-
tion within the meaning of Section 368(a) of the Code.
Section 10. General Provisions.
a. Effectiveness. This Agreement will be effective
from and after the earlier of the CNI Deconsolidation Date and
the CLC Deconsolidation Date; provided, however, the obligations
of the parties under Sections 4 and 5 hereof shall continue in
effect after any termination of this Agreement for a period
ending 30 days after the later of the last day on which a Rede-
termination may be made against the Affiliated Group, a Combined
Group, Buyer, CNI, or CLC for (i) any Pre-Closing Period or (ii)
any Straddle Period, during which CNI Group and/or CLC Group was
a member of the Affiliated Group and/or a Combined Group.
b. Entire Agreement; Binding Effect. This Agreement
(a) constitutes the entire agreement and supersedes all other
agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof and (b) shall
not be assigned by either party (by operation of law or other-
wise) without the prior written consent of the other party.
c. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal
or unenforceable, the enforceability of the remaining provisions
hereof will not in any way be effected or impaired thereby.
d. Time of Payment. Any payment required to be made
under this Agreement for which the terms of payment are not
specifically provided elsewhere in this Agreement shall be paid
within 30 days following the date on which the amount of the
underlying liability to which such payment relates is paid. Any
amount required to be paid under this Agreement, which is not
paid by the end of such 30-day period, will thereafter bear
interest at the large corporate underpayment rate specified in
Section 6621(c) of the Code (or any successor provision thereto)
from the date of such payment to the appropriate Tax Authority to
the date of full payment to the appropriate party hereunder.
e. Applicable Law. This Agreement shall be gov-
erned by and be construed in accordance with the laws of the
State of Delaware, without giving effect to the principles
thereof relating to conflicts of laws.
f. Notices. All notices, requests and other commu-
nications hereunder shall be in writing and shall be deemed given
if delivered personally, if telecopied (only if confirmed), if
sent by FedEx or other overnight courier or delivery service or
if mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following ad-
dresses or facsimile numbers:
(a) If to Buyer:
c/o SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) If to Seller:
c/o Tribune New Media Company
Xxx Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: President
With a copy to:
Tribune Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxx Xxxxx, Director of Taxes
The address or facsimile number of a party, for the purposes of
this Section 9(f), may be changed by giving written notice to the
other party of such change in the manner provided herein for
giving notice. Unless and until such written notice is received,
the addresses and facsimile numbers provided herein shall be
deemed to continue in effect for all purposes hereunder.
g. Amendment and Waiver. No amendment of any provi-
sion of this Agreement shall in any event be effective, unless
the same shall be in writing and signed by the parties hereto.
Any failure of any party to comply with any obligation, agreement
or condition hereunder may only be waived in writing by the other
parties, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. No
failure by any party to take any action against any breach of
this Agreement or default by the other parties shall constitute a
waiver of such party's right to enforce any provision hereof or
to take any such action.
h. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto
and, subject to Section 9(b) hereof, their respective successors
and assigns, and nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or reme-
dies of any nature whatsoever under or by reason of this Agree-
ment.
i. No Third-Party Beneficiaries. This Agreement is
solely for the benefit of the parties to this Agreement and the
other members of the Affiliated Group and should not be deemed to
confer upon third parties any remedy, claim, liability, xxxx-
bursement, claim of action or other right in excess of those
existing without this Agreement.
j. Alternative Minimum Tax. All Federal Income Tax
computations with respect to the federal alternative minimum tax
shall be made in a manner that is consistent with Proposed
Regulation SECTION 1.1502-55. Seller shall allocate alternative
minimum tax credits, if any, to CNI Group and CLC Group in
accordance with Proposed Regulation SECTION 1.1502-55. Thus, the
amount of any alternative minimum tax credits allocable to CNI
Group and/or CLC Group and not utilized with respect to Pre-
Closing Periods will be allocated to CNI Group and/or CLC Group
as of the Deconsolidation Date.
k. Federal Income Tax Return Closing Date. Unless
otherwise required by the Internal Revenue Service or a court of
competent jurisdiction, Seller and Buyer agree to file all
Federal Income Tax Returns, and to take all other actions relat-
ing to Federal Income Taxes, in a manner consistent with the
position that CLC Group and CNI Group are members of the Affili-
ated Group for all days from the date hereof through and includ-
ing the CNI Deconsolidation Date and the CLC Deconsolidation Date
respectively.
l. Ratable Allocation Election. The parties agree
that, to the extent permitted by applicable law and regulations,
they will make all Federal Income Tax computations with respect
to the Pre-Closing Period ending on the relevant Deconsolidation
Date and the immediately following taxable period of CNI Group
and/or CLC Group, as the case may, pursuant to the ratable
allocation method (as specified in Treas. Reg. SECTION 1.1502-
76(b)(2)(ii)) and the parties shall execute and file all Tax
forms and documents necessary thereto (including the statement(s)
specified in Treas. Reg. SECTION 1.1502-76(b)(2)(ii)(D)).
m. Reattribution of Losses. Seller shall not make any
election to reattribute losses with respect to the CNI Group or
CLC Group under Treas. Reg. SECTION 1.1502-20(g), without the prior
written consent of Buyer; provided, further, that no losses with
respect to the CNI Group or CLC Group that are attributable to a
Post-Closing Period shall be carried to any Pre-Closing Period.
n. Treatment of Tax Payments and Refunds. The parties
agree that, to the extent permitted by applicable law and regula-
tions, they will treat any payment or refund of Federal Taxes and
Non-Federal Taxes pursuant to this Agreement as payment of the
Federal Tax or Non-Federal Tax liability of the party making such
payment or as the refund of the Federal Tax or Non-Federal Tax
liability of the party entitled to such refund.
o. Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and deliv-
ered shall be deemed an original, but all of which together shall
constitute one and the same instrument.
p. Headings; Pronouns and Conjunctions. The section
and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Unless otherwise indicated
herein or the context otherwise requires, the masculine pronoun
shall include the feminine and neuter, the singular shall include
the plural and the plural shall include the singular. The word
"or" shall not be deemed exclusive.
* * *
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement under seal as of the date first written above.
SOFTKEY INTERNATIONAL INC.
By:
Name:
Title:
TRIBUNE COMPANY
By:
Name:
Title:
XXXXXXX'X NEWMEDIA, INC.
By:___________________________
Name:
Title:
XXXXXXX'X LEARNING COMPANY
By:___________________________
Name:
Title:
